I went through this exact same confusion last month when filing our 1120-F! As others have mentioned, these Corporate AMT questions are really only relevant for massive corporations. Since you mentioned you're a mid-sized foreign company filing for the first time, you can almost certainly answer "No" to all three questions. Just to break it down simply: - Question 1: Were you ever a billion-dollar+ company before? (Probably no) - Question 2: Are you a billion-dollar+ company now because you were before? (Probably no) - Question 3: Do you qualify to stop being considered a billion-dollar+ company? (Not applicable if you never were one) The IRS unfortunately makes everyone answer these questions even though they only apply to a tiny fraction of filers. It's like asking everyone if they own a yacht - most people can confidently say no! Just make sure to document your reasoning in case you're ever questioned about it.

I'm dealing with the exact same issue on our 1120-F filing! Reading through all these responses has been incredibly helpful. It sounds like for most of us mid-sized companies, the answer is a straightforward "No" to all three questions since we're nowhere near the $1 billion threshold. What's really frustrating is that the IRS makes everyone answer these questions even when they clearly don't apply to 99% of filers. It would save so much confusion if they just added a simple explanation like "If your company has never had income over $1 billion, answer No to questions 1-3." Thanks to everyone who shared their experiences - it's reassuring to know other people were just as confused by the wording of these questions!

Has anyone else had an issue where their tax software didn't generate the right forms? I used TaxAct this year and had a similar problem with some investment sales not showing up on the right forms even though I entered everything correctly.

I went through this exact same situation two years ago and can confirm that responding to the CP2501 notice with proper documentation is the right approach. Don't panic - this is actually a very common issue that gets resolved easily once you provide the right information. Here's what worked for me: I wrote a clear letter explaining that the property was my primary residence for over 2 years, included copies of my purchase documents showing the original cost basis, the 1099-S form, and proof of residence (utility bills, voter registration, etc.). I also calculated the exact gain and showed it was well under the $250k/$500k exclusion limit. The key is being thorough in your documentation. Include everything that proves: 1) When you bought the house, 2) When you sold it, 3) That it was your primary residence for at least 2 of the last 5 years, and 4) Your actual capital gain calculation. I mailed everything certified mail and got a letter back about 8 weeks later confirming no additional tax was due. The IRS just needed to see that I was aware of the sale and properly claiming the exclusion. Don't amend your return unless you absolutely have to - responding to the notice directly is much cleaner and faster.

Just a personal data point - I had about $2400 in CEQP/P dividends in my IRA last year and my custodian (TD Ameritrade) filed the 990-T for me. They took about $320 from my IRA to pay the taxes. I didn't have to do anything except they sent me a copy of the filing for my records. I've since moved most of my MLP investments to my taxable account because even though there's more personal tax complexity, at least I don't lose part of my retirement savings to taxes before withdrawal.

I went through a similar situation with CEQP/P in my Roth IRA last year. The key thing to understand is that your $1,318 in dividends likely generated UBTI since CEQP/P is structured as a Master Limited Partnership. The $43 loss from selling shares won't offset the dividend income for UBTI purposes - they're treated separately. Since you're over the $1,000 UBTI threshold, your IRA custodian should have filed Form 990-T and paid taxes directly from your IRA assets. I'd recommend calling Vanguard specifically and asking to speak with someone about "UBTI and 990-T filings" for your IRA account. Regular customer service reps often don't understand these issues, so you might need to ask for a specialist. Also check if Vanguard charges a fee for 990-T filings - many custodians do. This might influence your future investment decisions about holding MLPs in retirement accounts versus taxable accounts.

Has anyone dealt with reporting these adjustments on M-3? I'm trying to figure out how to properly reflect the timing differences since the income/loss adjustments relate to prior years but are being reported in the current year.

This is a great discussion that covers most of the key issues with Form 8986/8978 reporting. One additional consideration I'd add is documentation - make sure you're keeping detailed records of how these adjustments flow through to future years. I recommend creating a separate workpaper that tracks the original K-1 amounts, the 8986 adjustments, and the net effect on your NOL carryforwards and partnership basis. This will be crucial for accuracy in future years, especially if you receive additional 8986 forms or if the client disposes of the partnership interest. Also, don't forget to update your permanent file with copies of all the 8986 forms and your Form 8978 calculations. These adjustments can have ripple effects for years to come, and you'll want clear documentation for future reference.

As a PA resident myself, just remember that Pennsylvania has a flat tax rate (3.07%) which makes the state portion pretty straightforward compared to other states. That's something to consider when deciding whether to pay someone. For what it's worth, my husband and I paid $180 at a local tax office last year for a similar situation (W-2s, some stocks, and interest). We're doing it ourselves this year because it wasn't complicated enough to justify the cost.

Brian, I totally understand the tax anxiety! I was in a very similar situation last year - W-2, some Robinhood trading, and interest income from my savings account. The stress was real. I ended up going with a local CPA and paid $195 for both federal and PA state returns. What made it worth it for me was the peace of mind and the fact that she caught a deduction I didn't even know existed (home office expenses since I worked remotely part of the year). That said, after seeing how straightforward my situation actually was, I'm planning to try doing it myself this year using one of the software options mentioned here. Your situation sounds manageable for DIY if you're comfortable following step-by-step instructions. One tip: if you do go the preparer route, call around to a few local offices for quotes. I found the local CPA was actually cheaper than the big chains and spent way more time explaining everything to me. Good luck!