I had a similar situation and my accountant told me to keep track of "startup" activities vs ongoing business expenses. Apparently pre-opening costs have different rules than regular business expenses. You might want to check out IRS Publication 535 (Business Expenses) which talks about the difference. I think you can elect to amortize startup costs over 15 years or something like that.

The key distinction you need to understand is between startup costs and regular business expenses. Since you already have rental properties, this new property expansion might not qualify for the same startup cost treatment as someone just entering the rental business. For your $14,000 in repairs, you'll need to categorize each expense: 1. **Repairs that restore the property to working condition** (fixing plumbing, painting) - these can typically be deducted immediately once the property is placed in service 2. **Improvements that add value or extend useful life** (upgraded flooring, better water heater) - these must be depreciated over 27.5 years 3. **Costs incurred before the property was available for rent** - these might need special treatment The critical date is when you made the property "available for rent" - not when you found a tenant. If you completed repairs in November 2022 but didn't list it until January 2023, then January 2023 is likely your "placed in service" date. This means you'd claim the deductible expenses on your 2023 return, not 2022. However, if you can demonstrate the property was ready and you were actively seeking tenants in 2022 (even informally), you might be able to claim 2022 as the placed-in-service year. I'd recommend getting professional guidance since the timing affects not just which year you claim expenses, but also how they're treated under passive activity loss rules.

I've been selling Magic cards for about 5 years now, and the distinction between dealer and investor isn't always clear-cut. I maintain three separate categories: 1. Personal collection (never for sale, held 2+ years) 2. Long-term specs (purchased specifically as investments, held 1+ years) 3. Active inventory (regular buying/selling) For tax purposes, #1 and #2 qualify for collectible capital gains treatment when I occasionally sell, while #3 is ordinary income. The key is DOCUMENTATION. I track purchase date, price, condition, and intended purpose (collection, investment, or inventory) at the time of purchase. When audited two years ago, this system held up because I had consistent records showing clear intent and separate physical storage for each category. Without that paper trail, the IRS would have classified everything as dealer inventory.

This is such a helpful thread! I'm in a similar situation with sports cards and was completely confused about the tax implications. One thing I'd add based on my research is that the Section 1202 qualified small business stock exclusion might apply in certain situations if you incorporate your business properly, though it's pretty complex. Also, for anyone considering the business route, don't forget about quarterly estimated tax payments. Once you're making significant income from card sales, you'll need to pay estimated taxes throughout the year rather than waiting until April. I learned this the hard way and got hit with underpayment penalties my first year. The documentation advice from everyone here is spot on - I wish I had started tracking everything from the beginning instead of trying to recreate records later. Now I photograph every card I buy with the receipt and note my intent right in the filename.

Has anybody tried just printing and mailing their return instead of e-filing? After my second rejection I just said screw it and mailed everything in. No rejection possible that way!

Thanks for sharing this solution! I went through the exact same frustrating cycle of rejections last month. What made it even more confusing was that H&R Block's error message just said "incorrect AGI" without any mention that amendments could be the culprit. For anyone else dealing with this - another thing to watch out for is if you filed a superseding return (not just an amendment) the previous year. The IRS treats these differently than regular 1040-X amendments, and you might need the AGI from your very first filing, not the superseding return. Also, if you can't locate your original pre-amendment AGI, you can request a wage and income transcript from the IRS website (irs.gov) which will show exactly what they have on file for verification purposes. Way faster than calling and waiting on hold!

Just to add a real-world example - my company had a partial audit last year that included our meal expenses. We had a mix of casual lunches ($20-30 per person) and some high-end dinners ($200+ per person). The IRS didn't question the actual amounts but focused entirely on whether we had documented the business purpose and attendees. They disallowed several deductions where we had the receipt but couldn't provide notes on what business was discussed or only had first names of the attendees. The expenses they approved included both McDonald's meals and fancy dinners - the documentation was what mattered, not the price point.

As someone who works in tax compliance, I want to emphasize that the "ordinary and necessary" standard is really the key here. The IRS Publication 463 states that meal expenses cannot be "lavish or extravagant under the circumstances," but this is intentionally subjective. In practice, what I've seen trigger audits isn't necessarily the dollar amount, but rather patterns that don't make business sense. For example, consistently expensive meals with the same "client" might raise questions about whether these are actually personal expenses. A few practical tips: 1) Keep contemporary records - don't try to recreate documentation months later, 2) Note the specific business discussed, not just "client meeting," 3) Include full names and business relationships of all attendees, and 4) Be consistent with your industry norms. The $15 McDonald's lunch and $2000 steakhouse dinner can both be perfectly legitimate deductions if properly documented and appropriate for your business context. Focus on the documentation requirements rather than worrying about arbitrary dollar thresholds.

I went through this last year. So stressful. They questioned my niece as my dependent. I had full custody. They wanted school records. Medical records too. And proof of support. Took almost 4 months total. The waiting was awful. But I got everything resolved. Keep really good records. Make copies of everything. Send certified mail. Follow up every two weeks. Don't miss any deadlines. Good luck!

I'm currently going through something similar - got my audit notice last month for dependent verification. One thing I learned early on is to organize everything by dependent and by requirement. The IRS typically wants proof of four things: relationship, residency, age, and support. For relationship: birth certificates, adoption papers, or court custody documents. For residency: school enrollment records, medical records with your address, or utility bills showing the dependent lived with you. For age: birth certificates usually cover this. For support: keep receipts for food, clothing, medical expenses, school costs - anything showing you provided more than half their support. Timeline-wise, mine has been about 2.5 months so far and still ongoing. The initial response took them 6 weeks to acknowledge, then they requested additional documentation. Now I'm waiting again. The key is staying proactive - don't just wait for them to respond. Call every few weeks to check status and make sure nothing got lost in their system. Also, if you're dealing with divorced parents or split custody situations, get copies of your divorce decree or custody agreement. That was the game-changer in my case - clearly showed which years I had the right to claim.