Has anyone had experience with deducting mortgage interest in a situation like this? I inherited a rental property with an existing mortgage and I'm trying to figure out if I can deduct the interest on Schedule E for the few months I had it before selling.

I went through something very similar when I inherited my uncle's rental property last year. The key thing that helped me was keeping meticulous records of everything - every rental listing I posted, every potential tenant I showed the property to, every repair receipt categorized properly. One thing that might help your cousin is to create a timeline showing her rental intent from day one. Even though she only had a tenant for 3 weeks, if she was actively marketing the property, showing it to prospective tenants, and making repairs specifically to keep it rentable during those months, that demonstrates legitimate rental business activity. The IRS Publication 527 has good guidance on this - they look at whether you're engaged in rental activity "for profit" rather than just the duration of actual rental. The fact that she inherited it as rental property, continued that use (even briefly), and made good faith efforts to maintain tenants supports the Schedule E treatment. Just make sure she's being honest about repairs vs improvements. Things like fixing broken appliances, painting, minor plumbing repairs are typically deductible repairs. But if she added new features, upgraded systems, or made structural changes to increase the property value, those should probably be capitalized to basis instead. The passive loss rules suspension upon sale is legitimate - that's exactly what IRC 469(g) is designed to handle. She should be fine as long as she has the documentation to back up her rental intent and proper expense categorization.

anyone else notice how the where's my refund tool shows different info than the transcript? super annoying

Don't stress about the wording! The IRS uses "Accepted" and "Return Accepted" interchangeably - they both mean your return passed their initial screening and is in the system. The different dates (01/21 for federal, 01/23 for state) are totally normal since federal and state returns get processed separately. Maryland probably just took an extra day or two to process yours. As long as both show accepted status, you're good to go!

I'm dealing with a similar situation right now! Just got quoted $950 for my return which includes one rental property and a K1 from a partnership investment. What really helped me was asking the accountant to break down exactly what they'd be doing - turns out they include a consultation about tax planning for next year and will handle any IRS correspondence if issues come up. When I compared that to cheaper options, some were just basic preparation with no ongoing support. I ended up negotiating down to $800 by agreeing to have all my documents organized digitally beforehand. Maybe try asking your accountant what's included in that $1200 and see if there's any flexibility based on how prepared your paperwork is?

Shop around for sure! I had a similar experience last year - first accountant quoted me $1,400 for two rental properties and a K1, which seemed crazy high. I ended up finding someone who charged $750 for the exact same work and did a great job. The key thing I learned is that pricing varies wildly between tax preparers, even for identical situations. Some charge per form, others have flat rates for complexity levels, and some just seem to charge whatever they think they can get away with. I'd recommend getting at least 2-3 quotes and asking each one to explain their fee structure. Also ask about their specific experience with rental property taxes - you want someone who knows the ins and outs of depreciation, passive activity rules, etc. Don't just go with the cheapest, but definitely don't assume the most expensive is the best either.

I understand the confusion about filing for a "dormant" entity, but think of Form 5471 like this: it's not just about reporting business income - it's about transparency. The IRS needs to know about ALL foreign entities controlled by US persons, even if they never operated. Your client was legally the owner/director of a Belize corporation from the moment it was incorporated until it was dissolved. That relationship triggers the filing requirement regardless of activity level. The good news is that most schedules will be straightforward since there were no transactions, funding, or operations to report. The penalty for not filing starts at $10,000 and can increase, so it's definitely not worth the risk. Plus, having a complete filing actually protects your client by creating a clear paper trail showing the entity's brief, inactive existence should the IRS ever have questions down the road.

Based on my experience with similar situations, your client definitely needs to file Form 5471. I had a client who formed an Irish company that never operated, and we initially thought we could skip the filing since there was no business activity. Big mistake - the IRS sent a notice about the missing form and we had to go through the reasonable cause process to avoid penalties. The key thing to remember is that Form 5471 is an information return, not just a tax return. It's required whenever a US person has the required ownership/control relationship with a foreign corporation, regardless of activity level. For your client's situation with the Belize corporation, even though it's being dissolved in the same year with zero operations, the filing is still mandatory. The silver lining is that with no funding, no business operations, and no income, most of the schedules will be very simple to complete. Just make sure to get proper dissolution documentation from Belize as others have mentioned, and file the 5471 with the client's personal return. It's much easier to file a simple 5471 now than deal with penalty notices later.

Don't forget to consider how this impacts your Qualified Business Income (QBI) deduction if you take that. The recaptured depreciation counts as business income for QBI purposes, so it could actually help increase your deduction.

One more thing to keep in mind - make sure you have good documentation for the sale. The IRS will want to see proof of the original purchase price, the depreciation you claimed, and the sale price. Keep your receipts, the depreciation schedule from your 2023 return, and any documentation from the sale (like a receipt or online marketplace transaction record). I learned this the hard way when I got a letter from the IRS asking for documentation on a similar equipment sale. Having everything organized upfront makes it much easier if they have questions later. Also consider keeping records of the laptop's condition and why you needed to upgrade - it helps justify the business purpose of both the original purchase and the eventual sale.