Anyone know if you can e-file when claiming a Section 1341 credit? Last year I had a similar situation and TurboTax kept giving me an error when I tried to e-file with the claim of right credit.

I went through something very similar with duplicate EE bonds last year! One thing to watch out for - make sure you have all the documentation from Treasury showing the erroneous issuance before you file. The IRS may want to see proof that the second bond was issued in error and that you're required to repay the interest. Also, since you're dealing with $4,100, you'll definitely want to calculate both the deduction and credit methods when you file your 2025 return. In my case, the credit ended up saving me about $200 more than the deduction would have, but it depends on your tax brackets in both years. Keep all your correspondence with Treasury - you'll need it to support your Section 1341 claim. The IRS is pretty strict about having proper documentation for claim of right situations.

Just want to add another perspective - if you're not comfortable with how CashApp Tax is handling your retirement distributions, it might be worth paying for a more robust program just for this year. I've used both TurboTax and H&R Block, and they walk you through retirement distributions much more thoroughly with specific questions that help ensure accuracy. Even if it costs a bit more, getting it right is worth it. Retirement distribution mistakes can be expensive if the IRS thinks you took taxable distributions that you didn't report properly.

Mason, I went through something very similar last year with multiple Roth IRA distributions and CashApp Tax. Here's what I learned that might help: The blank Box 2a on your first two 1099-Rs is actually good news - it means those distributions are likely just your original contributions coming back to you tax-free. Since you mentioned opening these accounts "a few years back," you're probably well within your contribution amounts. For the third one with $390 in Box 2a, that's showing taxable earnings. The code T confirms it's an early distribution that might be subject to penalties. One thing to watch out for with CashApp Tax - when it asks for your "basis" in the Roth IRA, that's the total of all contributions you've made over the years (not including any growth). You'll need this number to complete Form 8606 correctly. If you're feeling overwhelmed, don't be afraid to switch to a more comprehensive tax program for this year. Sometimes the peace of mind is worth the extra cost, especially when dealing with retirement accounts where mistakes can be expensive. Keep all your 1099-R forms and any records showing when you made contributions to these accounts - you'll need them if the IRS ever has questions.

Heads up from someone who did this wrong! My wife and I started an S-Corp for our graphic design biz in 2018 and only paid ourselves tiny salaries ($15k each) while taking hefty distributions the first two years. Got audited in 2021 and the IRS reclassified most of our distributions as salary. Had to pay back employment taxes plus penalties. Ouch! Now we use the 60/40 rule - roughly 60% salary to 40% distributions, and document everything like crazy. Our accountant says there's no magic formula but reasonable should mean reasonable for your industry and workload.

As a newer S-Corp owner myself, I've found that documentation is absolutely key. We started conservative with salaries too, but what helped us was creating a simple spreadsheet tracking our monthly revenue, expenses, and profit margins. Every time we adjust our salaries, we document the business justification. One thing that's been helpful is looking at job postings for similar roles in our area to establish benchmarks. For tattoo shops specifically, you might look at what experienced tattoo artists or shop managers earn locally. Since you're doing both artistic work AND business management, your reasonable compensation should reflect both roles. The 30-40% of profits rule mentioned earlier is solid, but don't stress too much about hitting exact ratios every month when you're still growing. The IRS understands that new businesses have variable income. Just make sure whatever you're paying yourselves is defensible based on what you'd pay someone else to do your jobs, and keep good records of how you determined those amounts.

Does anyone know if we're supposed to attach the K-3 to our personal tax return or is it just for reference? My tax software is confusing me about this.

Based on everyone's experiences here, it sounds like USO definitely won't qualify for the K-3 waiver. I'm in a similar situation with commodity investments and was hoping to avoid the extra complexity, but it makes sense that anything dealing with global markets would have foreign activity. One question though - if USO sends out the K-3, do we need to report everything on it or just the parts that actually apply to our tax situation? Some of the international stuff might not be relevant to my particular circumstances, but I don't want to miss anything important that could trigger an audit later. Also, does anyone know roughly when these K-3s typically get sent out? I'm trying to plan my tax filing timeline and don't want to file early only to get the K-3 later and have to amend.

This is a really complex area that trips up a lot of S-corp owners! Based on what you've described, here are some key points to help clarify: 1. **APIC withdrawals are distributions**: When you take back part of your APIC contribution, it's treated as a distribution for tax purposes, even though you're "just taking back what you put in." This goes on Schedule K-1 with Code D. 2. **Your basis calculation looks correct**: With $54k APIC + $1,350 profits - $27k distribution = $28,350 remaining basis. No capital gains tax since you didn't exceed your total basis. 3. **APIC reporting**: APIC doesn't appear as a line item on Form 1120-S itself - it shows up on Schedule L (balance sheet) as part of paid-in capital. Many preparers attach a supplemental statement detailing APIC changes. 4. **M-2 vs basis**: M-2 tracks the Accumulated Adjustments Account (AAA), which can go negative, but that's separate from your personal basis calculation on Form 7203. 5. **Bank vs basis**: Your bank account balance and tax basis will almost never match - they're completely different concepts. The key thing is proper documentation and consistent treatment. Form 7203 was specifically created to help with these basis tracking issues that were causing so many problems. Make sure you're maintaining good records of all contributions, distributions, income, and losses to support your basis calculations.

Great question about Form 7203! As someone who's helped several S-corp clients navigate this relatively new form, here are the most common mistakes I see: **Common Form 7203 Mistakes:** 1. **Starting basis errors**: Many people only include their initial stock purchase but forget to add APIC contributions made in the same or prior years. 2. **Mixing stock and debt basis**: Loans to the corporation create debt basis, which is tracked separately from stock basis on the form. 3. **Income/loss timing**: Make sure you're using the correct year's K-1 amounts - income increases basis, losses decrease it. 4. **Distribution ordering**: Distributions first reduce stock basis to zero before affecting debt basis. **Regarding supplemental APIC statements:** It's not strictly required by law, but it's definitely best practice and many preparers do it to create a clear audit trail. The statement should include: - Beginning APIC balance - Additional contributions during the year (with dates) - Any withdrawals/returns of APIC (with dates) - Ending APIC balance - Brief description of each transaction This documentation becomes crucial if the IRS ever questions your basis calculations. Since S-corp basis issues are a hot audit topic right now, having clean documentation can save you a lot of headaches later. The fact that you're asking these questions shows you're thinking about this correctly. Many S-corp owners don't realize the importance of proper basis tracking until it's too late!