This thread has been super helpful. Just a heads up for anyone with kids - make sure you're also looking into the Earned Income Tax Credit (EITC) if you have lower income. It works differently than the Child Tax Credit and might help you even if you don't qualify for the full CTC. I almost missed out on over $3,000 from the EITC last year until my tax preparer caught it. The income thresholds are different, and you might still qualify for partial EITC even with lower income. Worth checking!

Great question about the EITC! The bill does include some changes to the Earned Income Tax Credit as well, though they're not as significant as the Child Tax Credit modifications. For 2024, the EITC will have slightly adjusted income thresholds and phase-out ranges, but the basic structure remains the same. The maximum credit amounts are also being increased modestly - I believe around $200-300 more for families with children, depending on the number of kids. The good news is that if you qualify for EITC, you can claim it alongside the Child Tax Credit. They work independently of each other. So even if someone doesn't have enough earned income to get the full refundable portion of the CTC, they might still benefit significantly from the EITC. I'd recommend using the IRS EITC Assistant tool on their website - it's actually pretty user-friendly compared to some of their other resources, and it will tell you exactly what you qualify for based on your income and family situation.

One thing nobody has mentioned yet is that if your acquisition is structured as an asset purchase rather than a stock purchase, many of these CFC compliance issues become moot. You'd be creating a new foreign subsidiary rather than stepping into the shoes of an existing CFC with potential compliance problems. Of course, this approach has its own complications (foreign asset transfer taxes, etc.) but it's worth considering if the due diligence is revealing significant compliance risks with the existing entity.

One critical aspect that hasn't been fully addressed is the potential Section 965 transition tax implications. If this CFC has accumulated post-1986 earnings and profits that haven't been subject to US tax, you could inherit a significant transition tax liability that was deferred from 2017. When you acquire the CFC, any unpaid Section 965 transition tax liability generally transfers to you as the new US shareholder. This could be substantial depending on the CFC's accumulated E&P and the foreign tax credits available. The previous nonresident alien owner wouldn't have been subject to this tax, so it might be sitting there as an undiscovered liability. I'd strongly recommend having your tax advisor specifically analyze the CFC's accumulated earnings and profits since 1986 and calculate what the Section 965 liability would have been. This could significantly impact your acquisition price negotiations and might even make the deal uneconomical if the liability is large enough. Also consider requesting representations and warranties from the seller regarding all potential US tax liabilities, not just the obvious Form 5471 filing issues.

Question: has anyone dealt with the actual process of cashing these HH bonds? I've heard some banks won't even cash savings bonds anymore, especially the older series. Do you have to mail them somewhere?

Just want to add another perspective based on my experience with my nephew's bonds last year. Since your daughter is 16 and the bonds are in her name, reporting on her return is definitely the way to go given her low income level. One thing to keep in mind - make sure you get the 1099-INT from the Treasury when you cash the bonds. It will break down the taxable interest clearly. For HH bonds that were converted from EE bonds, there can be two components: the deferred interest from the original EE bonds (which becomes taxable now) and any interest earned by the HH bonds themselves. Also, even though your daughter might not technically be required to file if her total income stays under the standard deduction, it's probably worth filing anyway. She'll likely get back any taxes withheld from her summer job, and it establishes a good paper trail for the bond interest reporting. The IRS likes to see consistency, especially with larger amounts like this. The whole process was much simpler than I expected once I understood the rules. Good luck!

Just wanted to add my experience - I was in a very similar situation with a CP21B after my divorce. The $60k amount you mentioned is substantial, so I'd strongly recommend getting everything in writing before splitting it. Even though your divorce decree specifies 50/50, I'd suggest both of you sign a simple agreement acknowledging the refund amount, the split, and who received the original check. This protects both parties if questions arise later, especially with an amount this large. Also, keep copies of the CP21B notice, your divorce decree section about tax refunds, and any bank records showing the transfer. The IRS might ask questions years later about large deposits, and having clear documentation makes everything much easier to explain. One more tip - if the check comes made out to both names with "AND" between them (not "OR"), you'll definitely need both signatures. Some banks are strict about this even for divorced couples.

I went through something very similar last year with a CP21B notice for about $45k after my divorce was finalized. A few things I learned that might help: First, the timing of when you separated matters more than you might think. Even though your divorce was finalized in 2020, if you separated earlier in 2019, that could affect how the refund should be split according to your decree. Some courts consider the separation date, not the divorce date, for financial matters. Second, make sure you understand what triggered the CP21B. In my case, it was missed business deductions from my ex's side business that we had forgotten to claim. This changed our negotiation since those deductions were directly related to her income, not our joint expenses. Third, consider opening a temporary joint account just for this transaction if the check comes in both names. It's cleaner than trying to get dual signatures at the bank, and you can close it immediately after splitting the funds. The person at work who mentioned taxation was definitely wrong - this is your money being returned to you, not new income. But definitely keep detailed records since $60k will likely trigger some banking reporting requirements. Good luck with the split - having it spelled out clearly in your decree should make this relatively straightforward!

A common mistake people make with homestead exemptions is not realizing that you need to reapply when you refinance your mortgage. The title company might not tell you this! When I refinanced two years ago, I lost my exemption and had to reapply.

I went through a similar denial situation last year and want to share what worked for me. The key thing I learned is that "documentation insufficient" often means they need proof of continuous occupancy, not just ownership. What ultimately got my appeal approved was creating a timeline document that showed my occupancy from day one. I included: utility connection dates (gas, electric, water, internet), my first grocery delivery receipt to the address, photos of me moving in with timestamps, and even my employer's records showing when I updated my address for payroll. The county assessor told me later that many people just submit a driver's license and deed, but they really want to see that you were actually living there as your primary residence during the required time period. They're looking for patterns of daily life, not just legal ownership. Also, don't be afraid to be persistent with the appeal process. My first appeal was also denied, but I submitted additional evidence and got approved on the second try. The $2,200 savings you mentioned is definitely worth the effort - that's real money that stays in your pocket every year going forward.