One approach I don't see mentioned yet is offsetting the recapture with other passive losses if you have them. If you have other rental properties that are showing paper losses this year, you might be able to use those to offset some of the recapture income. Also look into if a 1031 exchange makes sense for you. If you're planning to reinvest in another property anyway, you can defer the recapture tax by doing a like-kind exchange. You'd need to identify a replacement property within 45 days and close within 180 days, but it could save you a significant tax bill now.

This is a tough situation but unfortunately very common with bonus depreciation. I went through something similar with a commercial property where I took 100% bonus depreciation and then had to sell due to cash flow issues. One thing that might help reduce the sting - make sure you're capturing ALL your selling expenses when calculating the recapture. Things like realtor commissions, legal fees, title insurance, transfer taxes, etc. can all be deducted from your sale proceeds, which effectively reduces the amount subject to recapture. Also, if you haven't already, consider getting a second opinion from a tax professional who specializes in real estate. Some CPAs aren't fully up to speed on all the nuances of bonus depreciation recapture, especially with mixed-use properties or cost segregation studies. The $400k depreciation you mentioned seems quite high for a $1.3M property unless there were significant personal property components involved. The silver lining is that at least you got the tax benefit upfront when you probably needed it most. Still stings though - I totally get the frustration of paying taxes on "phantom income" from a property that barely generated any cash flow.

Has anyone claimed this while e-filing with TurboTax or similar? Do they ask for specific information about the blindness certification or do you just check a box?

Great question! I went through this exact same process with my husband who has albinism. The key is getting the ophthalmologist to write a letter that specifically addresses the IRS criteria while explaining how your wife's condition functionally impairs her vision. Here's what should be included in the letter: 1. Doctor's letterhead with full name, credentials, and medical license number 2. Statement that they have examined your wife and are familiar with her condition 3. Diagnosis of ocular albinism and explanation of how it affects vision 4. Specific mention that while her corrected vision may be better than 20/200 in controlled lighting, the inability to filter light causes severe functional vision impairment equivalent to legal blindness 5. Statement that the condition is permanent 6. Clear conclusion that she qualifies as legally blind for tax purposes The IRS understands that some conditions don't fit perfectly into the standard definitions but still cause equivalent functional impairment. The doctor should emphasize how the light sensitivity makes her vision severely restricted in normal daily activities, which is the key point for qualification. Keep the original letter with your tax records - you don't submit it with your return but need it available if ever questioned.

idk why they make this stuff so complicated smh. good luck op

Just went through this same process! One thing to add - if you go the online route through IRS.gov, make sure you have your prior year tax info handy for identity verification even if you didn't file. They might ask for things like SSN, DOB, and address from that year. Also double check with your financial aid office about the exact format they need - some schools want the actual IRS letter while others accept the transcript printout. Better to confirm now than have to redo it later!

I filed mine electronically on January 28th and just got my direct deposit yesterday! So about 4 weeks total. The MN website tracker was pretty accurate - it showed "processing" for most of the time then switched to "approved" about 3 days before the money hit my account. Hang in there, electronic filers usually get theirs within that 3-4 week window!

Filed mine electronically on Jan 30th and still waiting too! The MN website just says "processing" with no other details. Starting to get a bit worried since it's been over 4 weeks now. Has anyone had theirs take longer than the typical 3-4 week timeframe for e-filing? Wondering if there are delays this year or if I should be concerned about an issue with my return.

I'm new to this community and just went through this exact same situation last month! I had a 971 code dated August 15th and then an 846 code with August 22nd as my refund date. I was absolutely terrified that something was wrong, especially since I really needed that money for some emergency expenses. Reading through all these responses is bringing back memories of how stressed I was! But I'm happy to report that I got my refund exactly on the 846 date - August 22nd, just as promised. The notice (971) arrived in my mailbox about a week later and it was just informing me that they had corrected a small error on my return that actually worked in my favor. As a newcomer who's been through this, I can say with confidence that the pattern of 971 followed by 846 really does seem to be good news, not bad news. The fact that your 846 is dated after your 971 means they resolved whatever the notice was about and then approved your refund. September 9th should definitely be your day! This community has been such a great resource for understanding these confusing codes. Welcome to anyone else who's new here - the support and shared experiences really make all the difference when you're trying to decode IRS transcripts!

I'm completely new to this community and just discovered this thread while desperately trying to figure out what my transcript codes mean! I have the exact same situation - 971 code from last week followed by an 846 code with a refund date of September 15th. I've been absolutely panicking thinking something was wrong with my return. Reading through everyone's experiences here has been such a huge relief! It's incredible how helpful and supportive this community is. As a newcomer, I really appreciate how people are sharing their actual experiences rather than just guessing. The consensus that 971→846 is actually a GOOD pattern and not something to worry about is exactly what I needed to hear. Thank you to everyone who took the time to explain their situations - it makes such a difference for those of us who are new to decoding these mysterious IRS codes. This community is definitely going to be my go-to resource for tax questions going forward!