I just dealt with this last year! I started a photography business, spent about $1200 on equipment and a website, but only made $200 in actual revenue. My tax guy said I could absolutely deduct all those expenses against my other income. The key thing he told me was to show a "profit motive" - basically that I'm trying to make money, not just pursuing a hobby. He had me create a simple business plan, keep logs of time spent working on the business, and document all my marketing efforts. I filed a Schedule C showing a loss for the first year and had no issues. Don't forget you can also deduct home office expenses if you have a dedicated space for the business, even pre-launch!

Great question! I went through something similar when I started my consulting business. Based on my experience and what I learned from my CPA, you should definitely be able to deduct those $650 in startup costs. The IRS considers you "in business" when you're actively working toward launching with genuine profit intent - which it sounds like you clearly have. Your website development, inventory purchases, and business cards all demonstrate legitimate business activity, even without sales yet. A few tips that helped me: - Keep a detailed log of all business-related activities (even time spent researching suppliers, working on your website, etc.) - Save all communications with vendors, web developers, etc. as proof of active business pursuit - Consider getting an EIN if you haven't already - it helps establish business legitimacy - Document your business plan and marketing strategy, even if informal When you file, you'll likely use Schedule C and can claim up to $5,000 in startup costs for your first year. The remaining expenses can be amortized over 15 years. Since you're clearly working toward launch (not just daydreaming), you should be fine claiming these as legitimate business expenses. Just make sure to keep excellent records in case the IRS ever asks questions. Good luck with your launch!

Has anyone handled the situation where an employee makes an 83(b) election but then leaves before the shares fully vest? Our standard RSA agreement has a clawback provision for unvested shares, but I'm unclear on the tax implications for the employee and our reporting requirements in that scenario.

Quick question about RSA tax reporting - which tax forms need to be filed with the IRS when RSAs are initially granted? Is there something similar to the 3921 for ISOs?

You might want to check if your state return was accepted, even if the federal one is still pending. Sometimes, oddly enough, the state processes faster than federal. It could potentially indicate that your federal return is at least partially moving through the system, though I wouldn't take that as definitive proof of anything.

I'm experiencing the exact same issue! Filed Thursday morning with investment income from some stock sales and it's still showing "transmitted" in my software. This is definitely unusual - in previous years my returns were always accepted within 24 hours. Based on what others are saying about the enhanced validation for Schedule D forms, it sounds like we just need to wait it out. The IRS seems to be taking extra time to cross-reference our reported gains with the 1099-B forms they received from brokerages. Frustrating when you're used to quick processing, but at least it doesn't seem to be an error on our end.

I'm new to this community but currently facing the exact same EIN classification issue with my consulting LLC. We accidentally selected corporation instead of LLC with partnership taxation when applying for our EIN about 8 months ago, and just discovered the mistake while preparing our first year tax filings. This thread has been absolutely invaluable! The step-by-step guidance about Form 8832 and late election relief under Rev. Proc. 2009-41 has given me a clear path forward. I'm particularly thankful for the emphasis on documenting consistent partnership operations - we've been splitting profits according to our ownership percentages and making joint business decisions from day one, so I have solid evidence to support our case. I'm planning to follow the approach outlined by several members here: filing Form 8832 with the EIN issue date as the effective date, including a comprehensive reasonable cause statement, and attaching documentation of our consistent partnership behavior (operating agreement, distribution records, joint decision-making examples). One thing I wanted to add that might help others - when I called the IRS yesterday to check on processing times, the agent mentioned they're seeing fewer delays on Form 8832 submissions that include thorough documentation upfront. She emphasized that complete initial submissions with clear reasonable cause statements and supporting evidence tend to move through the system faster than those that require follow-up requests for additional information. Thanks to everyone who shared their experiences and success stories. It's reassuring to know this is a common, fixable mistake when you have the right documentation and approach!

I'm new to this community and dealing with almost the exact same situation! My business partner and I filed for our EIN about 6 months ago and accidentally selected "corporation" instead of "LLC with partnership taxation." We only caught the mistake recently when meeting with our accountant about upcoming tax filings. Reading through this entire thread has been such a relief - it's incredible to see how many others have faced this same issue and successfully resolved it. The detailed guidance about Form 8832 and Rev. Proc. 2009-41 has given me a clear roadmap that I didn't have before. What's particularly helpful is seeing the emphasis on documenting consistent partnership behavior from day one. We've been operating exactly like a partnership - making joint decisions, splitting profits based on our ownership percentages, taking draws instead of salaries, and our bank account is set up for partnership taxation. Now I understand how crucial it is to compile all this evidence to support our reasonable cause statement. I'm planning to follow the approach that's worked for so many here: file Form 8832 with our original EIN date as the effective date, include a comprehensive reasonable cause statement referencing our consistent partnership operations, and attach supporting documents like our operating agreement and distribution records. One thing I'm wondering - for those who successfully got their classification corrected, did you send your Form 8832 via regular mail or use a specific mailing method? I want to make sure it doesn't get lost in the system given all the IRS processing delays people have mentioned. Thanks to everyone who shared their experiences and advice. This community discussion has transformed what felt like an overwhelming problem into a manageable process with clear steps!

Don't forget to check state tax rules for clergy housing allowances! Federal excludes it from income tax but includes it for SE tax. But states vary wildly - some follow federal exclusion, others tax it fully, and some have special clergy provisions. In my state of California, the housing allowance is excluded from income for state tax purposes if it qualifies for federal exclusion. But I have a clergy client who moved from Pennsylvania where they DO tax housing allowances. Make sure you know your state rules!

One thing nobody mentioned - make sure your clergy client is aware of the Parsonage Allowance Lawsuit situation. Some court cases have challenged the constitutionality of the housing allowance exclusion as a violation of separation of church and state. The latest case (Gaylor v. Mnuchin) upheld the allowance, but it's been challenged multiple times. Just something to be aware of since this area of tax law could potentially change in future years.