Question - does anyone know if providing snacks/drinks in the office counts under this exception? We spend about $500/month on office snacks and coffee. Is that considered employee recreation under §274(e)(4) or something else?

Great thread everyone! As someone who's dealt with this exact issue, I wanted to add that timing can also matter for these deductions. The IRS looks at whether the event was held during or reasonably close to the business year you're claiming the deduction. Also, one thing I haven't seen mentioned is the "all employees" requirement. Under §274(e)(4), the recreational activity needs to be available to employees generally - you can't just treat executives or a select group and claim the full deduction. If you're doing tiered events (like a nice dinner for managers and pizza for everyone else), that could complicate your deduction. For your specific activities @CosmicCommander, make sure your team dinners aren't too frequent or lavish, as the IRS might view regular expensive meals as compensation rather than recreation. The escape room and company picnic sound perfect for the exception though!

Has anyone mentioned the at-risk rules yet? Even if you could somehow get around the passive activity loss limitations, you'd still need to have "at-risk" basis in the LLC to claim the losses. Did you or your wife actually contribute cash or property to the LLC, or personally guarantee any loans? Without at-risk basis, you can't take the losses even if they weren't passive.

Just to add another perspective on this - make sure you're also considering the state tax implications carefully. I had a similar situation with an out-of-state LLC and ended up owing more in nonresident state taxes than I expected because the state where the property was located didn't allow the same loss carryforward rules as the federal return. Also, keep detailed records of all your suspended passive losses. I use a simple spreadsheet to track mine year over year, including the original source and any partial usage. It becomes really important when you eventually dispose of the property or generate passive income to offset against. The IRS doesn't send you a reminder of what you have suspended, so it's on you to track it properly. One last thought - if this hunting property ever generates rental income (like seasonal hunting leases), that would be passive income that could be offset by your suspended losses. Might be worth discussing with the family whether monetizing the property could help everyone's tax situation.

I'm dealing with this exact situation right now and it's so stressful! Filed my missing 2021 return in January and still waiting for my 2023 refund to release. Reading through everyone's experiences here is actually really helpful - at least I know I'm not alone in this waiting game. @Monique Byrd thanks for the specific IRM reference, that's exactly the kind of official guidance I was looking for. @Jackie Martinez I'm going to start watching for that TC290 code you mentioned. Does anyone know if there's a way to tell if your prior year return has actually been processed vs just received? My transcript still shows "no record of return filed" for 2021 but I got a confirmation when I e-filed it 6 weeks ago.

I went through this same situation two years ago and it was absolutely maddening! I had 570/971 codes on my 2021 return because I hadn't filed 2020 (long story involving a move and lost documents). What really helped me was understanding that there are actually TWO separate processing queues - one for the missing return and one for releasing the hold on your current year refund. My timeline was: Filed missing 2020 return on January 15th → saw it post to transcript February 28th → hold released on 2021 return March 14th. So about 8 weeks total, but only 2 weeks after the prior year actually posted to my account. One thing I wish someone had told me earlier: don't panic if you see additional transaction codes appear during the waiting period. I saw a 766 code show up that scared me, but my tax preparer explained it was just part of the normal processing flow. The key milestone to watch for is when your missing year actually appears on your transcript with a 150 code - that's when you know the countdown to hold release has really started!

Don't forget you can also deduct other expenses related to your gig work! I do DoorDash and deduct a portion of my cell phone bill since I need it for the app, insulated bags I bought for deliveries, and even a percentage of car insurance and maintenance based on business vs personal use. Those deductions really add up and help offset the self-employment tax mentioned above.

I was in almost the exact same situation last year! Main job plus two different gig apps, both under the 1099 threshold. Here's what I learned after doing a lot of research and talking to a tax preparer: You absolutely need to report ALL income, even without the 1099 forms. The $600 threshold is just for when companies are required to send you paperwork - it doesn't change your obligation to report every penny you earned. For your Schedule C, you can combine DoorDash and Instacart since they're both delivery services. I did the same thing with Uber Eats and DoorDash. Just report the total $850 income and any business expenses you had. One thing I wish I'd known earlier - start tracking EVERYTHING now for next year! I used an app called MileIQ to automatically log my driving miles, and I kept receipts for things like phone chargers, insulated bags, and even some car maintenance. Those deductions really help offset the self-employment tax you'll owe on that $850. The self-employment tax is what caught me off guard - it's about 15.3% on your gig income over $400. But the business deductions help reduce that burden significantly. Good luck!

Great question about the EA exam timeline! I'm actually in a similar boat - working full-time at a regional CPA firm and just started my EA exam prep last month. From my research and talking to colleagues who've passed, three months is definitely doable but you'll need to be really disciplined. I'm planning about 15-20 hours per week, which breaks down to roughly 2 hours on weeknights and 6-8 hours total over the weekend. One resource I haven't seen mentioned yet is the IRS's Continuing Education Provider directory - many of them offer EA exam prep courses that you can take at your own pace. I found a few that have evening and weekend options specifically designed for working professionals. Also, if your firm has any EAs on staff, definitely ask if you can pick their brains about study strategies. My supervisor gave me some old practice exams and shared which topics tend to be heavily tested versus what you can skim over. The commute study idea is brilliant - I've been using the IRS Tax Pro podcasts during my drive, and while they're not specifically EA exam focused, they cover a lot of the same material in a digestible format. Keep us posted on how your prep goes! It would be great to have someone else going through this journey at the same time.

This is such a helpful thread! I'm in a similar situation - working about 40 hours a week at a tax prep firm and considering the EA exam. Reading everyone's experiences is really encouraging. One thing I wanted to add that I haven't seen mentioned much is the importance of understanding your own peak learning times. I discovered I retain information much better early in the morning before work rather than trying to study when I'm exhausted after a long day. I started waking up an hour earlier and doing focused study sessions from 6-7 AM, then using my evening time for lighter review or listening to podcasts. Also, for anyone using practice questions, I found it helpful to keep a running "mistake log" where I wrote down every question I got wrong and why. This became my go-to review material in the weeks leading up to each exam part. Sometimes seeing your common error patterns written out helps you avoid them on test day. The three-month timeline is definitely achievable with discipline! I'm planning to start my prep in January and take my first part in April. Would love to connect with others on similar timelines for mutual support and accountability.