I'm dealing with a similar situation right now with our LLC dissolution. One thing that's been crucial is making sure you have proper documentation for the loans versus capital contributions distinction. The IRS scrutinizes this heavily during partnership audits. For Mike's situation, if the loans were truly loans (not disguised capital contributions), he should be able to claim a business bad debt deduction when it becomes clear the partnership can't repay. The key is proving there was a genuine debtor-creditor relationship with expectation of repayment. A few practical tips from my experience: 1) Get written confirmation from your accountant that the business is insolvent and unable to pay its debts, 2) Document any collection efforts made (even if unsuccessful), and 3) Make sure the loans were consistently treated as debt on your books throughout the partnership's existence. The timing of the bad debt deduction is also important - it should be claimed in the tax year when the debt becomes worthless, which might be before you file the final 1065 if insolvency is already established.

I'm currently going through a similar partnership dissolution and wanted to share some insights about the partnership's side of this equation. While everyone's focused on Mike's bad debt deduction (which is correct), don't forget that the partnership itself may need to report cancellation of debt income if the loans are forgiven. However, since you mentioned the partnership is insolvent, you'll likely qualify for the insolvency exclusion under IRC Section 108. This means the partnership won't owe tax on the forgiven debt as long as you can demonstrate that total liabilities exceeded total assets immediately before the debt cancellation. You'll need to file Form 982 with your final 1065 to claim this exclusion. Make sure to prepare a balance sheet showing the partnership's insolvency - this documentation will be crucial if the IRS questions the exclusion. The timing matters too: the insolvency test is applied immediately before each debt cancellation, so if you're forgiving multiple partner loans, document the financial position before each forgiveness. This is often overlooked in partnership dissolutions, but getting it wrong can result in unexpected tax liability for the partnership even when it has no assets to pay with.

I'm dealing with this exact same thing right now! Just checked my transcript and saw -$2,156 and had a mini heart attack thinking something went wrong with my filing 😅 But reading all these comments makes me feel so much better - it's honestly reassuring that literally everyone goes through this same panic the first time they see those minus signs! The IRS really should put some kind of disclaimer or explanation on transcripts because this backwards system is so confusing. Thanks everyone for sharing your experiences - now I can actually sleep tonight knowing that negative means I'm getting money back instead of owing it! 🙏

I literally just went through this EXACT same confusion yesterday! Opened up my transcript and saw -$1,847 and immediately thought "oh no, what did I do wrong?!" 😰 Spent like 30 minutes googling and panicking before I found out that the IRS basically does everything backwards from how normal humans think about money. It's honestly insane that they use accounting terminology on documents meant for regular people - like why not just put "REFUND AMOUNT" instead of confusing minus signs?? But yeah, your -$4,322 is definitely your refund! The IRS shows it as negative because from THEIR perspective, it's money going OUT of their system to you. Super counterintuitive but at least now we're all experts at reading these confusing transcripts! Congrats on getting money back! 🎉

Just FYI - there's a $2,500 threshold for Form 943. If you pay less than $2,500 in wages to agricultural employees during the year, you might be exempt from filing. But since you mentioned running regular payroll, sounds like you'll be over that. And if you're using a payroll service they should handle the deposits and everything for you!

This thread has been incredibly helpful! I'm in a similar situation with our small vineyard. One thing I wanted to add that might help others - make sure you also understand the difference in Social Security and Medicare tax treatment for agricultural employees. Agricultural workers are subject to Social Security and Medicare taxes, but the timing of when you need to pay these can be different from regular employees. For agricultural employees, you generally don't owe Social Security and Medicare taxes until you either pay them $150 or more in cash wages during the year, OR they work for you on 20 or more days during the year for cash wages computed on a time basis (rather than piecework). This is different from the income tax withholding rules, so you could have a situation where you're withholding income tax but not yet owing Social Security/Medicare taxes, or vice versa. Your payroll provider should know this, but it's worth double-checking since agricultural payroll has so many special rules that even experienced providers sometimes miss!

Am I the only one who finds the BNA tax planner calculation for qualified business income deduction (Section 199A) to be completely unreliable? I've manually calculated it for several clients and BNA seems to miss phase-out thresholds consistently.

I've been dealing with similar BNA frustrations for months now! One thing that helped me with S-Corp data entry was creating a standardized checklist of all the required fields before starting. BNA doesn't give you clear error messages when you miss something, so having that checklist prevents me from getting halfway through and realizing I forgot a crucial piece of info. For the depreciation scenarios, I learned the hard way that you need to set up your asset categories first in the master client profile before trying to run comparisons. Otherwise the software gets confused about which assets belong to which entity. Also, make sure you're using the correct placed-in-service dates - BNA is very picky about this and will throw off all your calculations if the dates are inconsistent. The learning curve is brutal but it does get better once you figure out their weird workflow logic. Hang in there!

Another option worth considering is TaxAct - their free federal filing includes support for W2s and most 1099 forms without forcing you to upgrade. I've used it for the past two years with similar income situations (W2 plus multiple 1099-NECs from freelance work) and never hit a paywall like I did with TurboTax. The interface isn't the most modern, but it's pretty intuitive and has good help sections that explain what each form is for. They also have a decent review process that flags potential issues before you file. State filing does cost extra (around $20), but the federal portion handles complex situations well for free. One thing I really like is that they don't constantly try to upsell you during the process - you can just focus on getting your taxes done without pop-ups suggesting premium features every few screens.

Thanks everyone for all the great suggestions! I'm definitely going to try a few of these options. The automatic document scanning feature that @Ethan Clark mentioned with taxr.ai sounds really appealing since I hate manually entering all those 1099 boxes - I always worry I'm going to mess something up. I'm also intrigued by the VITA program @Emma Johnson suggested. I didn't know that was a thing! Having someone walk through everything with me in person might be worth it for peace of mind, especially since this is my first year dealing with multiple 1099s. Quick question for anyone who's used these services - do any of them handle estimated tax payments for next year? Since I'll probably have similar 1099 income next year, I want to make sure I don't get hit with underpayment penalties.