I see a lot of people suggesting the conversion of an option to stock through assignment might trigger wash sale rules, but I'm not sure that's correct. Publication 550 specifically states that wash sales apply when you sell stock or securities at a loss and buy "substantially identical" stock or securities. The key is whether a call option and the underlying stock are "substantially identical" - and most tax professionals I've worked with don't consider them to be unless the options are deep ITM. Your ATM options likely wouldn't qualify as substantially identical. My CPA has always treated synthetic longs exactly as your brokerage is reporting them - separate transactions with different tax treatment for each leg.

The confusion around "substantially identical" securities is understandable because the IRS hasn't provided crystal clear guidance specifically for synthetic options strategies. However, there are some key distinctions that might help clarify things. The general rule from Revenue Ruling 58-384 is that options and their underlying stocks are NOT considered substantially identical securities for wash sale purposes, unless the option is so deep in-the-money that it's essentially equivalent to owning the stock itself. Since your options were at-the-money when opened, they likely wouldn't meet this "deep ITM" threshold. The timing issue is also important - in your case, you didn't sell stock at a loss and then buy an option. Instead, you had an option expire worthless and simultaneously acquired stock through assignment of another option that was part of the same synthetic strategy from day one. That said, given the complexity and the fact that synthetic longs are designed to replicate stock ownership, I'd recommend keeping detailed documentation of your investment rationale (beyond tax considerations) and consider consulting with a tax professional who specializes in options strategies if you're using this approach frequently. The current treatment by your brokerage appears to follow standard practice, but having professional backup never hurts with complex strategies.

i messed up and claimed this incorrectly in 2021... ended up with a CP12 notice and had to pay back $1500 😭 the instructions are so confusing its ridiculous

This thread is so helpful! I had no idea about the American Opportunity Credit until now. I'm a sophomore working part-time and paying for school mostly with loans, so it sounds like I'd qualify for the full $2,500. Quick question though - do I need to wait for my school to send me Form 1098-T or can I request it early? I'm eager to file and get my refund since every dollar counts right now. Also, has anyone had issues with the IRS questioning loan-funded expenses? I want to make sure I have everything documented properly before I submit.

Quick question - did you file Form 2553 yourself or use a tax professional? I've seen this exact issue before with several clients, and it was usually because the form wasn't filled out correctly. Specifically, in Part I, there's a box for "date corporation first had shareholders" and one for "effective date of election" - if these aren't consistent with your narrative, the IRS defaults to the next tax year.

I went through something very similar when I converted my LLC to S-Corp last year. The IRS pushed my election to the following year, and it turned out to be a combination of timing issues and how I filled out the shareholder information section. Here's what I learned: if you converted from LLC to C-Corp in December 2024 but didn't have actual shareholders until after that date, the IRS might have used the shareholder date as your starting point rather than the incorporation date. Also, if you filed Form 2553 more than 75 days after either the incorporation date OR the date you first had shareholders (whichever is later), they automatically push it to the next tax year. My recommendation is to call the IRS first like others suggested, but also check your original form to see if there's a date discrepancy that might explain their decision. If it was truly just a processing error, they can usually fix it over the phone. If there was a technical issue with your filing timing or dates, you might need to request relief under the "reasonable cause" provisions, which requires a written explanation. Don't panic though - I've seen this resolved both ways, and worst case scenario, being a C-Corp for one year isn't the end of the world if you plan accordingly.

Has anyone used QuickBooks for tracking their real estate LLC finances? We're just starting out and trying to figure out the best system.

I went through something very similar when my partners and I started our real estate LLC two years ago. The tax complexity can definitely be overwhelming at first! A few things that might help beyond what's already been mentioned: 1. Don't forget about the potential Section 199A deduction (20% pass-through deduction) - real estate activities can qualify, but there are specific rules about whether your flipping is considered a "trade or business" vs investment activity. 2. For your vacant lot development costs, keep meticulous records of everything - surveys, permits, interest, insurance. These typically get capitalized into the basis of the property until it's completed/sold, then you can deduct them. 3. Consider electing out of the partnership audit rules (Section 6221) if your LLC qualifies. This can save headaches if you ever get audited, as it allows partners to be audited individually rather than at the partnership level. 4. Make sure your operating agreement clearly spells out profit/loss allocations and capital account maintenance. The IRS scrutinizes these closely for real estate partnerships. The learning curve is steep but gets much easier after your first year once you have systems in place. Hang in there!

I'm in a similar spot but with a 1098-T from 2022. Which tax software is best for filing an amended return like this? Can the free ones handle it?

Just want to emphasize what others have said - you're definitely not too late! I missed claiming my 1098-T for 2021 and successfully amended in 2023. The key thing is to be thorough with your paperwork. Make copies of everything before you mail it, and definitely use certified mail or priority mail with tracking when you send your 1040-X to the IRS. One tip that saved me time: before you start the amendment process, call your school's financial aid office and ask them to verify the amounts on your 1098-T. Sometimes there are corrections or additional qualifying expenses they can clarify that might increase your credit. I discovered I had additional fees that qualified but weren't originally reported on my form. Also, don't stress about filing both your 2023 amendment and your 2024 return in the same season - the IRS processes these completely independently. Just make sure you're using the correct year's forms for each filing!