One thing I'd add that might be helpful - make sure you understand the frequency limitation too. You can only use the Section 121 exclusion once every two years. So if either you or your husband used this exclusion on a previous home sale within the past 2 years, you wouldn't be eligible this time around. But assuming this is your first time using the exclusion (or it's been more than 2 years since either of you last used it), you're all set. The fact that you've lived there continuously since 2019 makes this a very straightforward case. Also, while you don't need to reinvest the proceeds to get the exclusion, you might want to consider the timing of your sale relative to when you plan to buy your next home for cash flow purposes. Having that $130k gain tax-free gives you nice flexibility for your next purchase!

Great question about Section 121! I went through this exact situation when I sold my home last year. You're absolutely right that married couples can exclude up to $500,000 in capital gains, and it sounds like you're in a perfect position to take advantage of this. Just to reinforce what others have said - the 2-year ownership and use requirement is very straightforward in your case. Since you've been living there continuously since November 2019, you've got over 3 years of both ownership and primary residence use, which far exceeds the minimum requirement. One small tip I'd add: when you do your taxes next year, you'll report the sale on Form 8949 and Schedule D, but if your gain is fully excluded under Section 121, you won't owe any tax on it. Keep all your closing documents and any improvement receipts in a safe place - you'll need them for your records even though you probably won't owe taxes on the gain. The fact that you can rent for as long as you want without affecting the exclusion is such a relief, isn't it? We ended up renting for 8 months after our sale and it was great to have that flexibility to find exactly what we wanted. Best of luck with your sale and house hunting!

You absolutely did the right thing filing that amended return! I know it feels overwhelming having both processes running simultaneously, but you caught the missing 1099-B and corrected it - that's exactly what you're supposed to do. The CP05 notice can be nerve-wracking, but it really is just the IRS saying "we need more time to review" - not "you're in trouble." Now that you've filed the 1040-X with the missing income information, you've essentially solved the problem that likely triggered the review in the first place. Yes, it might take longer to process everything, but you've protected yourself from potential accuracy penalties by being proactive. The IRS deals with situations like this regularly - original returns under review while amended returns are in queue. Their systems can handle it. Just keep checking the "Where's My Refund" tool for your original return status and "Where's My Amended Return" for the 1040-X. Stay organized with all your paperwork, and try not to stress. You handled this exactly right once you realized the error!

I went through this exact scenario two years ago - CP05 notice followed by filing an amended return about a week later when I realized I'd missed a 1099-INT. I was terrified I'd made things worse, but it actually worked out perfectly fine. What happened in my case was that the IRS completed their original review first (took about 6 weeks from the CP05 date), and then a few weeks later they processed my amended return. The agent I eventually spoke to said having the amended return already in the system actually helped because it showed I was being proactive about correcting the error rather than trying to hide anything. My advice: Don't second-guess yourself. You did exactly what you should have done when you discovered the missing 1099-B. The worst thing would have been to know about the error and do nothing. Processing might take a bit longer, but you're on the right track.

Another quick tip - consider using an expense tracking app specifically for vacation rentals throughout the year. I use one called Stessa that connects to my credit cards and bank accounts. When I buy something, I immediately categorize it in the app as either an operating expense or a capital improvement/depreciable asset. Takes seconds and saves massive headaches at tax time!

I'm dealing with a similar situation with my vacation rental startup costs! One thing that might help is looking into Section 195 startup expense deductions. You can elect to deduct up to $5,000 in startup costs immediately (with the remainder amortized over 15 years), but this phases out if your total startup costs exceed $50,000. Since you mentioned spending $75k, you might not qualify for the immediate deduction, but understanding how startup costs vs. ongoing operating expenses are treated could help you categorize things properly. Items purchased to get the property "ready for guests" might fall under startup costs rather than regular rental expenses. Also, don't forget about the passive activity loss rules - even though you mentioned losses will carry forward, make sure you understand the $25,000 annual rental loss allowance if your AGI is under $100k. This could impact whether immediate expensing vs. depreciation matters more in your specific situation.

I'm SO confused by all this tax stuff. My H&R Block software says I need Form 8949 but my friend who uses TurboTax said she didn't have to fill it out at all??? We both have stocks with Fidelity. Does it depend on which tax software you use????

I went through this exact same situation last year and it was so stressful! The key thing to understand is that when your brokerage reports the cost basis to the IRS (which shows up as Box 3 being checked on your 1099-B), you generally don't need to fill out Form 8949 for those specific transactions. However, I'd recommend double-checking a few things: First, look at ALL your 1099-B forms and make sure Box 3 is checked for every single transaction. If even one transaction has Box 3 unchecked, you'll need Form 8949 for that one. Second, if you had any wash sales or made any adjustments to the cost basis that your brokerage didn't account for, you might still need Form 8949. The Form 8453 your software generated might just be a precautionary measure. Most modern tax software is pretty good about only requiring it when you actually have forms that can't be e-filed. Since you used the summary option and everything was reported by your brokerage, you're probably fine without it. One last tip - keep all your brokerage statements and 1099-B forms for your records, even if you don't need to submit detailed forms. The IRS occasionally sends notices asking for clarification on capital gains, and having those documents makes responding much easier!

One thing nobody has mentioned yet - the company might have had a reason for issuing a 1099-NEC. Was there any chance this was structured as a buyback with an additional premium? Sometimes companies will pay more than fair market value for shares as a form of severance or additional compensation, especially with early employees. If that's the case, you might need to split the reporting - part as capital gains (the actual FMV of the stock) and part as compensation (any premium above FMV). Worth double-checking your sale documents to confirm the valuation matched pure FMV.

Just a heads up - I dealt with this exact issue last year with QSBS stock. Make absolutely sure you have documentation proving it qualifies as QSBS! The requirements are strict: - Company must be a qualified small business when you acquired the stock - Must have held the stock for at least 5 years - Company assets must have been under $50 million when stock was issued - Must be original issue stock (bought from company, not secondary) The IRS scrutinizes QSBS claims carefully because of the huge tax advantage. If you're claiming the 50% exclusion, make sure you have rock-solid proof for every QSBS requirement.