Has anyone dealt with self-certification of a QOF using Form 8996? I set up an LLC taxed as an S-corp for my QOF last year, and the form itself is pretty straightforward, but I ran into a few weird issues with the timing requirements for the 90% asset test that weren't clear from the instructions.

Great discussion everyone! I'm also working on a QOF structure and want to add one important consideration that hasn't been mentioned yet. When you elect S-corp taxation for your single-member LLC, you'll need to run payroll for yourself as the sole owner-employee, which adds ongoing compliance costs and complexity. The IRS requires S-corp owners who work in the business to take "reasonable compensation" as W-2 wages before taking distributions. This means you'll need to set up payroll, withhold employment taxes, and file quarterly payroll returns. For a QOF where you might have irregular cash flows especially in the early years, this can be challenging to manage. Just something to factor into your decision-making process along with the tax benefits. The LLC with S-corp election definitely solves the disregarded entity issue, but make sure you're prepared for the additional administrative burden.

Pro tip for dealing with CP 11 notices: ALWAYS keep a copy of your original tax return handy! I make PDFs of everything before submitting. Makes it so much easier to compare line-by-line with what the IRS is saying when you get one of these notices. Just saved me tons of time figuring out where my math apparently went wrong on my student loan interest deduction.

I went through this exact same situation about 6 months ago! Got my CP 11 notice and immediately panicked thinking I was in huge trouble with the IRS. Turns out it was just a simple calculation error on my Earned Income Tax Credit - I had miscalculated my qualifying income by including some unemployment benefits that shouldn't have been counted. The notice looked really intimidating at first, but once I sat down and compared it line by line with my original return, I could see exactly what they were talking about. The IRS explanation section actually does a decent job of breaking down what they changed, even though the language can be confusing at first glance. I ended up agreeing with their calculation and just paid the $430 difference online through the IRS website. The whole thing was resolved within a week and I haven't had any issues since. Don't stress too much about it - these math error notices are super common and definitely not the same as being audited. Just take your time reviewing the numbers and you'll figure out what happened!

As someone who's been through multiple IRS notices, I want to emphasize that you're handling this exactly right by asking for help and not panicking. The CP2000 notice you received is actually one of the more straightforward ones to resolve. Since you've identified the PayPal income as the likely issue, here are your next steps: 1. **Review the proposed changes carefully** - The letter should show exactly how much additional tax, interest, and penalties they're proposing. 2. **Gather your records** - Pull together any documentation about that translation work, including PayPal statements, any business expenses you had, and records of what you actually earned. 3. **Choose your response** - You have three options: - Agree completely (if their numbers match your records) - Partially agree (if you want to claim business deductions they don't know about) - Disagree (if their information is wrong) 4. **Respond by the deadline** - This is crucial. Even if you need more time to gather information, you can request an extension. The good news is that since this appears to be legitimate unreported income rather than an IRS error, the resolution should be straightforward. Just make sure to respond within the timeframe given, and don't let the tax terminology intimidate you - the IRS forms usually have clear instructions for each option.

I've been following this thread and wanted to add some perspective as someone who works in tax preparation. The advice here has been really solid - Miguel, you're absolutely on the right track with identifying that PayPal income as the issue. One thing I'd emphasize is to keep detailed records of your response. When you send in your partial agreement (which I'd recommend given those business expenses), make copies of everything and keep a timeline of when you sent it. The IRS can sometimes be slow to process responses, and having documentation helps if you need to follow up. Also, since English isn't your first language and tax terminology can be confusing even for native speakers, don't hesitate to have someone review your response before you send it. Many community centers and libraries offer free tax help during filing season, and they might still have volunteers available to help review IRS correspondence. The key thing is that you're handling this proactively instead of ignoring it. That puts you way ahead of people who just panic and do nothing. You've got this!

I'm dealing with a Letter 12C situation right now too and this thread has been super helpful! Just wanted to add that I called the IRS customer service line last week about my verification and they confirmed that the N/A transcript status is completely normal during the review process. The agent told me that when they receive your faxed documents, they actually remove your return from the normal processing queue to manually verify everything - that's why it shows N/A instead of your usual return info. She said not to worry unless it's been more than 12 weeks total since you first faxed your response. @Ryan since you faxed on Feb 20th and it's been 4 weeks, you're still well within the normal timeframe. The peak tax season backlog is real but they do eventually get through everything. I'd definitely wait the full 8 weeks before calling again since they'll just tell you the same thing anyway. Keep that fax confirmation safe though - that's your proof you responded on time if any issues come up later! Hang in there, we're all in this waiting game together 💪

I'm in almost the exact same situation! Got my Letter 12C about 5 weeks ago for a W-2 verification issue (different amount but same process). The waiting is absolutely nerve-wracking, especially when you see that N/A status on your transcript and start wondering if your documents got lost in the system. What's been helping me is keeping track of the timeline - like @Ian mentioned, the IRS agent confirmed that 12 weeks total is when you should actually start worrying. Since you faxed on Feb 20th, you're still well within normal processing time even with the peak season delays. I also used HelloFax like @Jessica suggested and got a confirmation receipt, which definitely helps with peace of mind. The online fax services seem way more reliable than traditional fax machines, especially when dealing with something this important. The hardest part is just the waiting game when your refund is sitting there in limbo. But from everything I've read and heard, as long as you responded within that 20-day window (which you did), you should be good. The IRS is just incredibly backed up right now. Hang in there - we're all riding this out together! 🤞

Just wanted to add that if you're ever unsure about your tax code, you can check it online through your HMRC personal tax account. You'll be able to see exactly how they calculated your code and what factors they've taken into account (like benefits, previous underpayments, etc.). Also, don't worry too much if your code changes between jobs - it's actually quite common. When you start a new job, your new employer uses the tax code from your P45 (if you have one) or puts you on an emergency code temporarily. HMRC then sends them your correct code once they've processed your employment details. The 1242L code is indeed the standard one for most people in the 2024-25 tax year, so you're likely on the right track. Just keep an eye on your payslips to make sure the deductions look reasonable for your salary level.

Just to add another perspective - I had the exact same confusion when I switched jobs last year! The 1242L code is definitely the standard one, but what really helped me understand my take-home pay was using a simple salary calculator online to work out exactly what should be coming out. With your £38,500 salary, after the £12,420 personal allowance, you'd be paying 20% tax on £26,080 (which is £5,216 annually). Don't forget National Insurance contributions too - that's 12% on earnings between £12,570 and £50,270, so roughly £3,112 per year on your salary. Your monthly take-home should be around £2,550-£2,600 depending on your pension contributions. If it's significantly different from that, it might be worth checking if you're on an emergency tax code temporarily or if there are other deductions you weren't expecting. The good news is that if you have been overpaying due to an incorrect code, HMRC will refund you once it's sorted!