As someone who's been through this exact headache, I want to add a few practical tips that might help both your current situation and future filing: **For your immediate concern:** Look in your TurboTax files or printed return for Form 8453. If it wasn't generated, you likely don't need to mail anything. If it was created, the form should include the specific IRS mailing address (varies by state) and list exactly which documents to include. **The "3-day rule" isn't as strict as it sounds** - while officially you're supposed to mail within 3 days of e-file acceptance, the IRS processing timeline is much more flexible in practice. Many tax professionals report that documents arriving weeks later are still processed without issues. **For next year:** Consider this hierarchy of approaches with TurboTax Desktop: 1. Import all transactions (fix errors individually if needed) = no mailing required 2. Use TurboTax Online instead = electronic document upload available 3. Enter summary numbers = requires mailing Form 8453 The frustrating part is that TurboTax doesn't make this workflow clear upfront. The software should warn users about the mailing requirement when choosing to enter summary data instead of importing transactions. One silver lining: Since your broker already sent your 1099-B data to the IRS electronically, there's built-in redundancy in the system. The mailing requirement is more about IRS verification procedures than missing information.

As a newcomer to this community, I'm dealing with this exact same TurboTax Desktop situation and want to share what I've learned from reading through everyone's experiences here. I also entered summary numbers for my 1099-B instead of importing transactions (due to too many errors that seemed overwhelming to fix), and like the original poster, I only realized afterward that this might require mailing physical documents. After reading through all the helpful responses, here's what I'm taking away: **For immediate action:** Check if Form 8453 was actually generated in your TurboTax files. If it was, that form will tell you exactly what to mail and where. If it wasn't generated, you might not need to mail anything. **Key insight I missed:** Importing transactions with errors and then fixing specific problematic entries individually would have avoided the mailing requirement entirely, while still maintaining accuracy. This seems like the best approach for future years with TurboTax Desktop. **Long-term solution:** Switch back to TurboTax Online next year for the electronic document upload capability that Desktop lacks. The tools mentioned here like taxr.ai for processing investment documents and Claimyr for actually getting through to the IRS also seem worth exploring. It's reassuring to know there are practical solutions beyond just struggling with the software's limitations. Thanks to everyone who shared their experiences - this community has been incredibly helpful for understanding what initially seemed like a very confusing and stressful situation!

Has anybody used TaxAct or TurboTax for nonprofit returns? I'm wondering if they handle these kinds of special situations or if I need specialized nonprofit tax software.

Just want to echo what others have said about documenting everything, even for that short initial period. I went through something similar with my nonprofit - we incorporated in late 2022 but didn't really start operations until 2023. For your situation, since you had zero revenue in 2023 and minimal expenses, the 990-N (e-Postcard) is probably your best bet for that first partial year (11/15/23-12/31/23). It's much simpler and you can file it online in about 10 minutes. The key eligibility factor is that your gross receipts were under $50K for that period, which they clearly were. Regarding penalties - yes, there can be late filing penalties ($20 per day up to $10K for small organizations), but the IRS is generally reasonable about waiving them for new organizations with legitimate reasons. When you file, include a statement explaining you were a newly formed organization waiting for 501(c)(3) determination and had no significant financial activity. I did this for our late first filing and never heard anything about penalties. One thing to keep in mind - make sure your fiscal year is properly established with the IRS. Since you're doing calendar year (Jan 1 - Dec 31), that should be straightforward, but double-check that it matches what you indicated in your 1023 application.

Has anyone considered the state tax implications? Each state handles entity transitions differently. In California, for example, using an old sole prop bank account for your corp can trigger a "successor liability" issue where your corp could be responsible for any unpaid taxes from the sole prop. On the flip side, in some states incorrectly attributing income to a corporation when it should be on the sole prop could trigger minimum corporate tax requirements you otherwise might have avoided.

This is a really complex situation that touches on several areas - entity separation, tax compliance, and banking regulations. From what I've seen in similar cases, the key is to act quickly to clean this up before it becomes a bigger problem. First, I'd strongly recommend getting that bank account ownership updated to your corporation ASAP. Most banks will let you do this with the right paperwork (corporate resolution, new signature cards, etc.). This eliminates the appearance that your sole prop is still operating. Second, you need to be very careful about how you're documenting any transfers between accounts. The IRS will want to see clear business purposes for any money movement between entities. If it looks like you're just using them interchangeably, that could jeopardize your corporate status. One thing I haven't seen mentioned yet - make sure you're not accidentally triggering any state franchise tax or minimum tax requirements by keeping the sole prop "active" through bank activity. Some states consider any business banking activity as evidence the entity is still operating, which could create ongoing tax obligations you don't need. I'd also suggest talking to a CPA who specializes in entity transitions. They can help you figure out if you need to file any forms with the IRS to properly document the transfer of assets from your sole prop to the corporation. Getting this documented properly now could save you major headaches if you ever get audited.

I just wanted to add my experience to help ease anyone's anxiety about this. I'm a CPA and have been helping clients navigate this exact confusion for months now. The IRS has been gradually rolling out these new portal features throughout 2024, and the "Audit Status" tab is appearing for virtually all users regardless of their actual audit status. The key thing to remember is that the IRS operates on a very structured timeline for audits. They typically have 3 years from your filing date to initiate an audit (with some exceptions), and they MUST send written notice before beginning any examination process. This isn't optional - it's required by law. Since you filed in February, received your refund in March, and haven't received any correspondence, you can be confident you're not under audit. The IRS processes over 150 million individual returns each year, and less than 1% are actually audited. The new portal tabs are just poor user experience design - they should only show relevant information to each taxpayer's situation. If you want peace of mind, keep checking your mail for the next few weeks, but based on everything you've described, you're in the clear!

I completely understand the panic you must have felt seeing that tab! I went through the exact same thing about two months ago and it really threw me for a loop. What helped me was understanding that the IRS has been rolling out these new portal features in waves, and they're appearing for everyone regardless of their actual tax situation. The fact that you already received your refund is actually the most reassuring sign possible. The IRS has automated systems that flag returns for review BEFORE they issue refunds, not after. If there had been any issues with your 2022 return, they would have held your refund while they reviewed it. I ended up calling the IRS (which took forever to get through) and the representative confirmed that these new tabs are part of their system modernization but don't indicate your personal status unless you've received official mail from them. Since you haven't gotten any letters, you're almost certainly not being audited. Try not to stress too much - the new interface is just poorly designed from a user experience standpoint. They really should only show relevant tabs instead of displaying everything to everyone!

One additional consideration that might be helpful - make sure to review your S-corp election timing and any potential Section 1202 Qualified Small Business Stock (QSBS) benefits. If your LLC made the S-corp election early enough and you've held your interest for at least 5 years, you might qualify for the QSBS exclusion which could eliminate federal taxes on up to $10 million of the gain (or 10x your basis, whichever is greater). This would be even better than just avoiding the 3.8% NIIT - it could potentially eliminate the entire federal capital gains tax on your $875K gain. The QSBS rules are complex and have specific requirements around when the election was made, the type of business, and how the stock was acquired, but it's definitely worth having your accountant review this when they return. Also, since you mentioned multiple owners, each owner can potentially claim their own $10M QSBS exclusion, so the total benefit for your group could be substantial. This is one of those situations where the entity structure (LLC electing S-corp treatment) might actually work in your favor for tax planning purposes.

Looking at your situation, you're in a really strong position to avoid the 3.8% NIIT on your $875K gain. Since you've been actively involved in running the business since 2018, you almost certainly meet the material participation requirements that exempt you from NIIT. A few key points based on the great discussion above: **Material Participation** - With 6+ years of active involvement, you likely qualify under multiple tests (500+ hours annually, substantially all participation, or the 5-of-10 years test). The LLC/S-corp structure doesn't change this fundamental exemption. **Documentation Priority** - Start gathering evidence of your participation NOW: emails showing business decisions, calendar entries, meeting minutes, travel records, contracts you signed, etc. Even without perfect hour logs, multiple types of evidence showing consistent involvement will be convincing. **QSBS Potential** - This could be huge! If your LLC made the S-corp election early and you've held your interest since 2018, you might qualify for Section 1202 QSBS exclusion. This could eliminate federal taxes on your entire $875K gain (not just the 3.8% NIIT). Given the potential $131K+ in tax savings, consider having your accountant prioritize this analysis even if they're on vacation. **Next Steps** - Gather all formation documents, S-corp election paperwork, and ownership records. Document your business activities timeline. If QSBS doesn't apply, the material participation exemption alone should save you about $33K in NIIT. With the sale in 6 weeks, time is critical but you have multiple strong paths to significant tax savings. This is definitely worth expediting professional review!