Has anyone dealt with the opposite problem? My LLC got a 1099-NEC but the work was actually done by me personally before I formed the LLC. Payment processor refuses to change it saying "we paid the entity listed on your invoice." Now I'm stuck figuring out how to report it.

I deal with business entity transitions all the time in my tax practice, and you're absolutely right to be concerned about this. The payment processor needs to void that S corp 1099-NEC immediately. Here's what's happening: The IRS computer systems will match 1099s against tax returns filed. Since your S corp is dissolved and won't be filing a return, that 1099-NEC will show as "unmatched income" in their system. This can trigger automated notices demanding a tax return for the dissolved entity, even years later. When you contact them again, be very direct: "You have issued a 1099-NEC reporting $X income to [S Corp Name], TIN [number]. This entity was dissolved in 2019 and performed no work in 2024. This form must be voided/corrected to show $0 income, not just transferred to my personal information." If they still won't cooperate, document everything and consider having a tax professional send a letter on letterhead - sometimes that gets better results than individual requests. You might also need to attach an explanation to your personal tax return documenting the error and your attempts to correct it. Don't let this slide - I've seen clients get IRS notices for dissolved entities years after the fact due to uncorrected 1099 issues.

Am I the only one who thinks the tax treatment of hedge fund investments is ridiculously complicated? Why can't the IRS just decide whether limited partnership interests are passive or not and stick with it? This portfolio vs passive distinction feels like it was invented just to confuse people.

The confusion is understandable, but there's actually a logical reason behind the portfolio vs passive distinction. The passive activity rules were created in 1986 specifically to prevent tax shelter abuse where people would invest in partnerships that generated artificial losses to offset their regular income. However, Congress recognized that legitimate investment activities (buying and selling securities, earning dividends and interest) shouldn't be lumped in with these tax shelter schemes. That's why they carved out "portfolio income" as a separate category - it's neither active nor passive. For hedge funds, even though you're a limited partner, the fund's primary activity is trading securities, which produces portfolio income/losses. This means your losses can offset capital gains plus up to $3,000 of ordinary income annually, rather than being trapped by passive loss limitations that might prevent you from using them at all. It may seem complicated, but it actually gives you better tax treatment than if these were classified as passive losses, which could potentially be suspended indefinitely if you don't have other passive income to offset them against.

Another option - check if the K-1 shows guaranteed payments to partners (Box 4). If the company is paying large guaranteed payments to current partners but claiming the business value hasn't increased, that could indicate they're extracting value through compensation rather than letting it reflect in equity value. This is a common tactic in closely-held businesses trying to lowball departing shareholders.

This is a textbook case of what we call "earnings manipulation" in valuation disputes. The pattern you've identified - stable business income with exploding guaranteed payments - is a red flag that the current partners are artificially depressing the apparent value of the business. A few additional things to look for on your K-1s: 1. Check if there are any "Section 179" deductions (accelerated depreciation) that might be artificially reducing reported income 2. Look at Box 12 with code "A" for alternative minimum tax adjustments - sometimes these reveal the true economic performance 3. Compare your percentage ownership over time - has it been diluted through additional capital raises? For negotiation leverage, calculate what your annual "return" would be if you accepted their offer (hint: it's probably negative after inflation). Then calculate what it would be based on the income growth you've documented. Present both scenarios and ask them to explain the discrepancy. Also, don't let them rush you. The fact that they're suddenly contacting multiple former employees suggests either an upcoming sale or liquidity event. Time is likely on your side, not theirs.

Got through this exact situation. Filed February 3rd. Return stuck for verification. Former employer never sent W-2 info to SSA. Called IRS April 12th. Submitted Form 4852 with final paystub. Refund received May 9th. Total 95 days. Worth the wait.

Based on my experience helping clients through similar situations, I'd recommend taking a proactive approach while you wait. First, gather all supporting documentation - final paystubs, direct deposit records, offer letter, anything that shows the wage amounts on your W-2 are accurate. This will be crucial if the IRS needs additional verification. Second, consider preparing Form 4852 (Substitute for Form W-2) as a backup plan, though don't file it yet since you have the actual W-2. The IRS often resolves these cases faster when they can see comprehensive documentation that supports the reported wages. Also, keep calling periodically (every 2-3 weeks) to check status - sometimes cases move through the system faster than the quoted timeframes, especially if the employer eventually does submit their data. The 120-day timeline is worst-case scenario, not typical resolution time.

dont worry fam ur money is coming. the IRS is actually pretty good about sticking to the DDD once you get one

Same DDD here! 2/11 gang 😅 I've been refreshing my bank app like crazy too. From what I've seen in previous years, most people with big banks (Chase, Wells Fargo, etc.) don't see it until the actual date or sometimes even the day after. The IRS usually sends it out on Friday for a Tuesday DDD, so your bank probably has it but is just holding it. Hang in there! 💪