Given that you're filing on the extension deadline today, I'd recommend taking a simplified approach for now and addressing the complexities later if needed. Since your K-1 is essentially empty and you mentioned the LLC hasn't generated income or had many expenses, you can likely file your personal return as-is today. The investment interest from your HELOC should be documented and saved for when you properly sort out the LLC's tax situation. Here's what I'd suggest for immediate filing: Keep records of all HELOC interest payments and documentation showing the funds were used to purchase the investment property. You can claim investment interest expense on Schedule A (Form 4952) if you have investment income to offset it against, but as others mentioned, you're limited to your net investment income. For the LLC situation - you're likely looking at filing a late partnership return at this point since the September 15th deadline has passed. The penalties for late partnership filing can be substantial ($210 per partner per month), but if the LLC truly has minimal activity, you might be able to argue reasonable cause. Don't let the LLC complications prevent you from filing your personal return today. You can always amend later once you get the partnership return sorted out properly.

I'm in a very similar situation and just wanted to share what ended up working for me after going through this exact same panic last year! The key thing that saved me was realizing that since the HELOC is in your personal name but was used for the LLC property, you need to treat this as a capital contribution to the LLC. Essentially, you borrowed the money personally and then contributed those funds to the LLC for the land purchase. This means the LLC should show a capital contribution from you (and your sister) on its books, and the interest expense should flow through the LLC return. However, since you're past the partnership filing deadline, here's what I'd recommend for today: 1. File your personal return now without the investment interest deduction to meet the deadline 2. Immediately file the late partnership return (Form 1065) for the LLC showing the interest expense 3. Once you get the corrected K-1, file an amended personal return (Form 1040X) to claim your share of the interest expense The late filing penalty for the LLC will likely be less costly than missing your personal return deadline. Also, if this is the LLC's first year and you can show reasonable cause (like relying on professional advice or the complexity of the situation), you might be able to get the penalty waived. Document everything now - loan statements, property purchase documents, and evidence that the HELOC funds went directly to the property purchase. You'll need this paper trail for the amended returns.

As someone who's been through estate administration, I want to echo what others have said about your sister handling this herself. There's really no legitimate reason she can't deposit or cash an inheritance check made out to her name. Most inheritance checks come from estate attorneys or financial institutions, and these can typically be cashed at the issuing bank even without an account. Yes, there will be fees, but that's much simpler than creating potential tax complications for both of you. The "bank account issues" explanation is concerning. Even if her account is overdrawn or frozen, she could open a new account at a different bank with proper ID and the inheritance documentation. Banks are generally very willing to work with people who have legitimate inheritance funds to deposit. I'd also suggest she contact the estate attorney or executor who issued the check if she's having trouble. They deal with these situations regularly and can provide guidance on the proper way to handle the funds. Don't put yourself at risk trying to solve her banking problems - this needs to be handled through proper channels.

I'm glad you've decided to step back from this situation after reading all the excellent advice here. As a tax professional, I can confirm that everyone who warned you about the potential complications was absolutely right. One additional point I'd like to make: inheritance checks often come with specific documentation (like estate tax ID numbers or probate court information) that banks use to verify their legitimacy. When someone else deposits that check, it can create confusion in the bank's systems and potentially delay or complicate the transaction even further. Your sister really does need to handle this directly. If she's having legitimate banking issues, most banks have customer service departments that can work with her to resolve account problems, especially when she has $25,000 to deposit. If her current bank won't work with her, any other bank would be happy to open a new account for someone with that kind of deposit. You made the smart choice prioritizing your own financial security over trying to solve someone else's banking problems. Sometimes being helpful means encouraging people to handle their affairs through proper channels rather than taking shortcuts that could backfire on everyone involved.

Quick heads up from someone who works in this area - the IRS has been cracking down HARD on one-person religious organizations in the last few years. Too many tax scams using "churches" as fronts. They have a special audit flag for orgs where the founder is the only member and receiving compensation. This doesn't mean you can't do it legitimately! But you need to be EXTRA careful about documentation. I recommend recruiting at least 2-3 other people as board members (even if they're not "members" of your religion) and make sure you follow EVERY formality - regular documented meetings, clear bylaws, impeccable financial records.

As someone who went through this process recently, I'd strongly recommend consulting with a nonprofit attorney before accepting any donations, even small ones. The complexity around religious organizations is real, and the stakes are high if you get it wrong. One thing that helped me was creating a timeline: first establish the legal entity through your state, then get your EIN, then file for 501(c)(3) status. Only after that approval should you actively solicit donations. In the meantime, you can absolutely talk about your mission and build interest without taking money. Also consider starting with a fiscal sponsorship arrangement through an established religious organization while you get your paperwork sorted. This lets you accept tax-deductible donations legally while maintaining your independence. Many denominational bodies offer this service even for non-affiliated religious groups. The IRS publication 1828 "Tax Guide for Churches and Religious Organizations" is incredibly helpful - it's free and covers most of these scenarios in detail.

There's a specific pattern with the February 25th direct deposit date this year. I've tracked this on several tax forums, and most people are seeing deposits hit on February 26th (today) rather than the 25th. As of February 26th at 10:30am, about 65% of Chime users with 2/25 DDDs have reported receiving their funds. The remaining should come through by end of day according to previous patterns from January refunds.

SUCCESS UPDATE: Mine just hit my Chime account! DDD was 2/25, deposit came through 2/26 at 1:42pm. According to IRS Publication 2043 (IRS Refund Information Guidelines for the Tax Preparation Community), the IRS issues refunds daily to authorized financial institutions. They're legally required to make deposits available by the next business day after receiving funds, but online banks like Chime typically process same-day when received.

As a newcomer who's been following this discussion closely, I wanted to thank everyone for such a thorough breakdown of this topic. I was actually researching this exact same strategy after hearing about it from a colleague, so this thread has been incredibly timely. What really stands out to me is how what seemed like a straightforward tax optimization turned out to have so many hidden pitfalls - the Kiddie Tax eliminating most benefits, the audit risk from pattern recognition, and the loss of control over custodial accounts. It's a great reminder that when it comes to taxes, there really aren't any secret loopholes that the IRS hasn't already considered. The alternative strategies mentioned here (529 plans, direct tuition payments, and stock donations to colleges) seem much more sustainable and legitimate. I'm particularly interested in the direct tuition payment strategy since it doesn't count against gift limits - that seems like a powerful tool for families with the means to pay college expenses outright. One follow-up question: for those who've used the college stock donation approach, do most schools handle this smoothly, or have you encountered any that were unfamiliar with the process? I'd hate to assume my child's future college can accept stock donations only to find out they don't have the infrastructure for it.

As someone new to this community but definitely not new to tax planning mistakes, I wanted to add my perspective on this discussion. I actually attempted a very similar strategy about 18 months ago - transferring appreciated stock to my teenage daughter's custodial account to take advantage of what I thought would be her lower tax bracket. What I discovered (the hard way) is that not only did the Kiddie Tax rules eliminate any meaningful savings, but the timing requirements became incredibly complex. You have to carefully track when transfers happen, when sales occur, and ensure you're not creating patterns that look suspicious to the IRS algorithms that several people have mentioned. The real kicker for me was realizing that once I transferred those assets, they legally belonged to my daughter. When she turned 18, she had every right to use that money for whatever she wanted - not necessarily college as I had intended. That loss of control was something I hadn't fully considered when planning the strategy. I ended up pivoting to maxing out 529 contributions instead, which gave me a state tax deduction and kept control of the funds while still providing tax-advantaged growth for education expenses. Much simpler, completely legitimate, and no audit anxiety. The lesson I learned is that the IRS has been dealing with creative tax strategies for decades - if something seems too clever or too good to be true, it probably is. Sometimes the most effective approach is also the most straightforward one.