I've been in a similar mixed-use situation for about 2 years now and wanted to add a few thoughts based on my experience. One thing I discovered that might be helpful: if you're planning to deduct vehicle expenses for business trips that start from your mixed-use location, the IRS treats your home office as your "business location" for mileage deduction purposes. This means trips from your office to client meetings, supply runs, etc. can be fully deductible business miles rather than commuting miles. Also, regarding the lease structure question - I initially signed personally but later had my LLC assume the lease when my landlord was willing to do a lease assignment. This gave me the flexibility to start simple but transition to cleaner business accounting as my operations grew. Not all landlords will allow this, but it's worth asking about when negotiating. One record-keeping tip that's saved me time: I use a simple smartphone app to log my office usage and take timestamped photos of my workspace setup monthly. It takes about 5 minutes but creates a consistent documentation trail that shows exclusive business use over time. The CPA meeting you mentioned is definitely the right move - they can help you model out the tax implications of both lease structures based on your specific business projections and personal tax situation.

One aspect I haven't seen mentioned yet is the impact on your business insurance needs. When I set up my mixed-use space, I discovered that standard homeowners/renters insurance typically excludes coverage for business equipment and liability. You'll likely need either a business owner's policy (BOP) or at minimum a business personal property endorsement to your existing policy. Also, consider the long-term implications if you decide to move. If you establish your business address at this mixed-use location, you'll need to update that address with the state, IRS, clients, vendors, etc. when you relocate. It's not a dealbreaker, but something to factor into your decision-making process. From a practical standpoint, I'd recommend starting with measurements and floor plans before you sign anything. Walk through the space with a tape measure and sketch out exactly which areas would be exclusively business use. This exercise often reveals that the usable business percentage is different from your initial estimate, which could significantly impact your cost-benefit analysis. The fact that you're meeting with a CPA shows you're thinking about this correctly. Make sure to bring photos and measurements of the space to that meeting so they can give you specific advice rather than general guidelines.

I'm a tax preparer and see this scholarship/1099-NEC issue every year with increasing frequency. You're absolutely right to be confused - scholarships should NOT be reported on 1099-NEC forms unless you actually performed services for the organization. The foundation's explanation about being a non-profit doesn't justify using the wrong form. Many non-profits issue scholarships correctly using 1099-MISC (Box 1) or coordinate with schools for 1098-T reporting. Here's my professional advice: 1) Call them back and specifically request they issue a corrected 1099-MISC instead, citing IRS Publication 970 2) If they refuse, you'll need to report it as "Other Income" on Schedule 1 (NOT Schedule C which would trigger self-employment tax) 3) For any portion used for qualified educational expenses (tuition, required books/supplies), subtract that amount and note "SCH EXCL" This is becoming such a common problem that I keep IRS Publication 970 handy to explain proper scholarship reporting to confused foundations. Don't let their mistake cost you unnecessary taxes - scholarship money should never be subject to self-employment tax when it's truly an educational grant with no work requirements. Keep all documentation showing how you used the funds in case the IRS has questions later!

I'm a tax advisor and want to emphasize something crucial that hasn't been mentioned clearly enough: DO NOT ignore this 1099-NEC even if you think it's wrong! The IRS receives a copy of every 1099-NEC issued, and their automated matching system will flag your return if they don't see that income reported somewhere. This can trigger correspondence audits or notices that are much more hassle to deal with than just reporting it correctly upfront. Here's the safest approach: 1) First, absolutely try to get the foundation to issue a corrected 1099-MISC - many will cooperate once you explain the proper IRS requirements 2) If they won't budge, report the full amount on Schedule 1 Line 8i as "Other Income" and write "SCHOLARSHIP" 3) If you used any portion for qualified educational expenses (tuition, mandatory fees, required textbooks), you can exclude that portion by reporting it as a negative amount on the same line with notation "SCH EXCL" 4) The key is NEVER let this flow to Schedule C where it would be subject to 15.3% self-employment tax Keep detailed records of your scholarship award letter and receipts showing how funds were used. The IRS understands that some organizations issue incorrect forms, but they need to see that you handled the reporting appropriately. Better to spend a few extra minutes reporting it correctly than to deal with IRS notices later asking why you didn't report income they have on file!

The timing of your US citizenship might actually be the most important factor here! If you weren't a US citizen when you signed over the rights OR when the property was sold, the whole situation might be much simpler. Did your brother send the money after you became a US citizen? If so, then it's probably just a foreign gift to a US person. You'd need to report gifts from foreign persons over a certain threshold on Form 3520. But if the money was sent while you were still a Philippine citizen and then you became a US citizen afterward, different rules apply. The whole transaction might be outside US tax jurisdiction entirely.

Based on your timeline, this creates an interesting jurisdictional situation. Since you were a Philippine citizen when you signed over the rights but are now a US citizen receiving the money, you're likely looking at this as a foreign gift for US tax purposes. The key factor is that you relinquished legal ownership years ago as a non-US person, and now as a US citizen, you're receiving money from your brother (a foreign person) based on his generosity rather than any legal entitlement you currently have. You'll want to report this on Form 3520 if it meets the threshold requirements for foreign gifts. The good news is that as the recipient of a gift, you typically don't owe income tax on the amount - that's your brother's concern from a gift tax perspective. However, I'd strongly recommend getting professional advice before filing anything. An international tax attorney can review the specific facts and timing to confirm whether this is indeed gift treatment or if the IRS might view it differently based on the "beneficial ownership" concept others mentioned. The fact that your brother is honoring the original inheritance proportion despite the legal transfer could complicate things. Document everything - the original inheritance, the transfer of rights, and the basis for receiving this money. You want a clear paper trail that supports whatever filing position you take.

Can I just double check - the person who is 19 can still file their own return even if they're claimed as a dependent by their parents, right? They would just check the "can be claimed as a dependent" box?

Just want to add another perspective here - I work as a tax preparer and see this situation all the time. Your brother definitely sounds like he qualifies as a qualifying relative dependent based on what you've described. One thing I always tell clients is to keep good records of the support you're providing. Since your parents are paying for housing, food, phone bill, etc., I'd recommend they keep receipts or bank statements showing these expenses. If the IRS ever questions the dependency claim, you'll want documentation that proves they provided more than half of his support for the year. Also, even though he's not working now, if your brother does get a job later in the year, just make sure his total gross income stays under $4,450 to maintain his qualifying relative status. If he goes over that threshold, your parents won't be able to claim him as a dependent for 2025.

I've been following this discussion closely as someone who recently went through the same decision process, and I wanted to share a few additional considerations that might be helpful. One thing that really influenced my decision was the investment flexibility difference. With a DAF, you're typically limited to the investment options provided by the sponsoring organization (Fidelity, Schwab, etc.), which are usually quite good but still limited. Private foundations give you complete control over investment decisions, which can be valuable if you have strong investment preferences or want to pursue alternative investments. Another factor worth considering is the geographic flexibility for international giving. Many DAF sponsors have limitations on grants to foreign charities, requiring them to go through intermediary organizations. Private foundations generally have more flexibility here, though they need to exercise expenditure responsibility. The timing aspect mentioned earlier is crucial too. With the current 60% limit potentially dropping to 50% after 2025, and given the political uncertainty around extending it, there's a real advantage to maximizing DAF contributions in the next couple of years if you're in a position to do so. For anyone still weighing these options, I'd recommend running the numbers for your specific situation across multiple years, not just looking at the immediate tax impact. The carryforward provisions can significantly affect the real-world benefit of the different deduction limits.

This has been such an enlightening discussion! As someone who's been wrestling with the same DAF vs private foundation decision, I really appreciate all the detailed explanations about the historical reasoning behind the different deduction limits. One aspect I haven't seen mentioned yet is the impact of state taxes. While we've focused on federal deduction limits, some states have their own rules for charitable deductions that might differ from federal treatment. Has anyone here dealt with state-specific considerations when choosing between DAFs and private foundations? Also, for those who mentioned using tax planning tools or speaking with IRS agents, did you get any guidance on how the SALT (State and Local Tax) deduction cap interacts with charitable giving strategies? I'm in a high-tax state and wondering if maximizing charitable deductions becomes even more valuable when you're hitting the $10,000 SALT cap anyway. The timing considerations around the 60% limit potentially reverting to 50% after 2025 are really compelling. It sounds like there's a real window of opportunity here for those of us who can accelerate our charitable giving timeline.