Does anyone know if there's a way to recreate the Schedule P Part 2 if you didn't properly track this in prior years? I've got functional currency amounts but never maintained the separate dollar basis tracking until now.

I've been dealing with Form 5471 for several years now and can confirm what others have said - you absolutely need to carry forward the dollar basis amounts from your 2022 Schedule P Part 2 ending balance to your 2023 beginning balance. Don't convert using 2023 rates. One thing I haven't seen mentioned yet is that you should also make sure you're properly categorizing any new 2023 inclusions by the correct PTEP category (Section 951(a), Section 951A, etc.) when you add them to your basis amounts. Each category needs to be tracked separately because they have different distribution ordering rules. Also, if you had any actual distributions during 2023, make sure you're reducing your basis amounts in the proper LIFO order and calculating the Section 986(c) gain/loss on the difference between your dollar basis and the dollar value of the distribution. This is where a lot of people mess up the currency calculations.

I'm currently dealing with a 570 code that appeared on my transcript 5 days ago. Reading through everyone's experiences here is really reassuring! I filed claiming the EITC and Child Tax Credit, so I'm guessing that might have triggered the review. Has anyone noticed if filing early vs. late in the season affects how long these reviews take? I'm trying to stay patient but it's hard when you're expecting that refund for bills.

I'm going through this exact same situation right now! Got the 570 code on my transcript about 10 days ago and have been checking obsessively every day since. Filed with both EITC and Additional Child Tax Credit, so I'm pretty sure that's what triggered the review. The waiting is honestly the worst part - not knowing if it's going to be 2 weeks or 2 months. Reading everyone's experiences here makes me feel a lot better though. Seems like most people get it resolved within 3 weeks or so. Fingers crossed we all get our refunds soon! 🤞

Has anyone mentioned the fact that you might also get hit with underpayment penalties if you don't have enough withheld throughout the year? IRS expects you to pay as you earn, not all at the end of the year.

One thing I don't see mentioned here is that you should also consider whether you have any other deductions or credits that might help offset the tax impact of your bonus. If you're planning to use this money for a house down payment, you might want to look into whether you qualify as a first-time homebuyer for any tax benefits. Also, if you haven't already maxed out your 401k contributions for the year, increasing those contributions can help reduce your taxable income and partially offset the bonus. You could ask your employer to increase your 401k withholding percentage for the remaining months of the year to capture some of that bonus money before taxes hit it.

I went through exactly this transition last year! Left my SEP open with the existing money and started a 401k when I brought on employees. One thing to watch for - make sure you properly document the termination of new contributions to the SEP (even though there's no formal closure). I kept a corporate minute in my company records noting the board decision to freeze the SEP and establish the new 401k. My accountant said this creates a clear paper trail if there's ever a question about why we stopped SEP contributions for the business.

Great question! I actually went through a similar transition when my consulting business grew. You're on the right track - you can absolutely leave your existing SEP IRA open with the current funds and simply stop making new contributions when you switch to the 401(k) plan. Since you'll have employees in 2025, continuing SEP contributions would require you to contribute the same percentage for all eligible employees, which gets expensive fast. The 401(k) route gives you much more flexibility with different contribution levels and employee matching options. One practical tip: when you set up the new 401(k), check if the plan allows incoming rollovers from IRAs. If so, you might want to roll your SEP funds into the 401(k) to consolidate everything in one place. This can also help if you ever want to do backdoor Roth conversions later, since having money in traditional IRAs complicates that strategy due to the pro-rata rule. The transition timing is perfect since you're doing it at the start of a new tax year. Just make sure your 401(k) plan document is properly drafted to handle the contribution types you want (employee deferrals, employer matching, profit sharing, etc.).

Don't forget about the Secured Debt advantage too! If you record the loan against the property (like a second mortgage or deed of trust), it becomes secured debt which gives you stronger tax footing. I learned this lesson the hard way - had a private loan from my in-laws that wasn't recorded against the property. During an audit, the IRS questioned whether it was actually a gift disguised as a loan. Had to produce bank statements showing all the payments made over 3 years to prove it was legit. Now I always record private loans with the county even though it costs a few hundred dollars. The recording fee is worth the peace of mind and stronger tax position.

This is a great question that many real estate investors face! The key thing to understand is that the IRS cares more about the legitimate business purpose of the loan than who the lender is. As long as you're using the money specifically for your rental property investment, the interest should be deductible on Schedule E. A few critical points to keep in mind: 1. **Documentation is everything** - Create a formal written loan agreement that includes the principal amount, interest rate, payment schedule, and maturity date. This doesn't need to be overly complex, but it should look professional and be signed by both parties. 2. **Interest rate considerations** - The rate should be reasonable and at arm's length. You can reference the IRS Applicable Federal Rates (AFR) as a baseline. If the rate is significantly below market, the IRS might view part of it as a gift rather than a legitimate loan. 3. **Keep excellent records** - Track all payments made, maintain copies of checks/transfers, and ensure the lender reports the interest income on their tax return. You'll need to provide the lender's information when you file. 4. **Consider recording the loan** - While not required for deductibility, recording a deed of trust or mortgage with your county can provide additional legitimacy and protection for both parties. The fact that it's family doesn't disqualify the deduction - just make sure you treat it like any other business loan with proper documentation and regular payments according to your agreement.