I got audited last year on this exact issue with a different commodity futures partnership! My advice: keep EXTREMELY detailed records of your basis adjustments. The IRS computer system often flags returns where the basis reported on Form 8949 differs significantly from what's on the 1099-B, even when you use the adjustment codes correctly. The auditor initially thought I was trying to avoid taxes until I showed my spreadsheet tracking each year's: - K-1 income by category (especially Section 1256 gains) - Distributions received - Basis adjustments calculated - Supporting documentation After reviewing everything, the auditor agreed my calculations were correct. But save yourself the headache and document EVERYTHING about your basis calculations!

Based on everyone's helpful responses, I want to add one more critical point that saved me significant time and potential errors: always request the "Partnership Basis Schedule" or "Outside Basis Statement" from the partnership if they provide one. Some partnerships like USO will provide a detailed basis tracking statement upon request that shows your cumulative basis adjustments from year to year. This can be incredibly helpful for complex situations involving multiple years of Section 1256 gains and distributions. If your partnership doesn't provide this, I highly recommend creating your own tracking spreadsheet starting from day one. Include columns for: - Beginning basis each year - K-1 income items (by line) - K-1 loss items (by line) - Distributions received - Ending basis This becomes invaluable when you sell, especially for partnerships with complex activities like commodity futures. It also provides clear documentation if you ever face an audit on the basis adjustments you report on Form 8949. The key is being proactive about tracking rather than trying to reconstruct everything when you sell years later!

ngl that taxr.ai thing mentioned above is clutch. used it last week and it broke down everything step by step. way better than trying to decode these transcripts myself lol

Had the exact same situation last year - 570/971 codes appeared after my EIC processed. The waiting is definitely stressful but in my case it was just routine verification. They wanted to confirm my child's social security number matched their records. Got my notice about 3 weeks after the 971 code date, sent back the requested docs, and refund hit my account about 6 weeks later. Keep checking your transcript for updates and respond to any IRS correspondence ASAP. The delay sucks but it's pretty standard for EIC claims nowadays.

Has anyone actually read the full IRS 2023-2 notice? It's super dense but from what I understand, it's addressing valuation issues more than step-up basis directly? I'm confused about why everyone is saying it changes step-up basis rules...

You're absolutely right to be confused - trust language can be incredibly difficult to parse! Based on what others have shared here, it sounds like the key is figuring out whether your father-in-law's irrevocable trust has any provisions that would still keep those properties in his taxable estate for step-up purposes. From what I'm gathering from this discussion, you'll want to look for things like "power of substitution" clauses or other retained powers in the trust documents. But honestly, this seems like something where you really need a professional to review the actual trust language - the specific wording apparently makes a huge difference. Given the $6.5M in assets involved, it might be worth getting a proper estate attorney to review the trust documents and explain your options in plain English that your father-in-law can understand. The cost of that consultation could save significant tax dollars down the road if there are planning opportunities you're not seeing.

Has anyone filed for the foreign tax credit (Form 1116) as a non-resident alien? I have dividends from ADRs in my Robinhood account that had some foreign tax withheld. Can I still claim this credit?

As someone who went through the exact same situation last year (NRA grad student with wash sales), I can definitely relate to the frustration! Here's what worked for me: I ended up using the IRS Free File program through FreeTaxUSA, which supports 1040-NR and handles wash sales correctly. The key thing is making sure your capital gains go on Schedule NEC (Not Effectively Connected income) rather than Schedule D - most regular tax software gets this wrong for non-residents. For the wash sale reporting, you'll still report the transactions as shown on your 1099-B, but the software should automatically adjust the basis and disallow the loss per IRS rules. The good news is that as a non-resident, you're only taxed on your US-source income at capital gains rates (0%, 15%, or 20% depending on your total income). A few tips: - Keep all your 1099s and any foreign tax documents - If you have treaty benefits from your home country, make sure to claim them - Consider e-filing if possible - it's much faster than paper filing Don't let those expensive services take advantage of your situation. The free options can absolutely handle this if you're willing to spend a bit of time learning the process!

I work in bookkeeping and have dealt with this exact situation many times. Here's what I recommend: prepare everything in December - complete the form, write the check dated 12/31/2022, and have the envelope ready to go. Then mail it on January 1st, with the signature dated 12/31. This way, your accounting books close cleanly in 2022 (check dated and recorded in December), but you're not technically filing before the quarter ends. The IRS generally looks at postmark dates, not signature dates, when determining timely filing.

I've been dealing with quarterly tax filings for years as a small business owner, and I completely understand your desire to keep everything clean within the calendar year. However, I'd strongly advise against filing before December 31st, even if you're certain no more wages will be paid. The issue isn't just about IRS flags or suspicion - it's about the legal certification you're making when you sign the form. By signing, you're certifying under penalty of perjury that the information is "true, correct, and complete" for the entire quarter. Since the quarter hasn't ended yet, you technically can't make that certification honestly. Here's what I do in similar situations: I prepare everything in December - calculate all the numbers, fill out the form completely, and even write the check. But I wait until January 1st to sign and mail it. This gives me the peace of mind that my accounting is done for the year, but I'm not creating any compliance issues with the IRS. The postmark date is what matters for timely filing, not when you prepared the paperwork. This approach has worked well for me for over 5 years without any issues.