My understanding from consulting with several attorneys is that McNulty primarily applies to physical assets. The court was concerned about actual possession of tangible assets (gold coins). With crypto, the assets aren't physically possessed - they exist on the blockchain with access controlled by keys. As long as your SDIRA custodian maintains some form of control or oversight of the assets (even if through administrative means rather than direct key possession), you may have a defensible position. The key distinction is whether you've completely removed the custodian from the equation.

I've been wrestling with this same issue for months and finally found a workable solution. The key insight is that the IRS seems to focus on whether you've maintained the custodial relationship, not necessarily who physically holds the keys. I ended up structuring mine through an SDIRA LLC where the custodian maintains administrative control and oversight rights, even though the LLC (which I manage as a fiduciary) holds the private keys. The critical documentation includes: 1. Custodial agreement that explicitly acknowledges the digital asset custody arrangement 2. LLC operating agreement with specific provisions about key management and custodial oversight 3. Regular reporting requirements to the custodian about asset holdings and transactions What differentiates this from McNulty is that the custodian retains legal authority over the assets and I'm acting as a fiduciary manager of the LLC, not taking personal possession. I also maintain detailed records showing all transactions require proper IRA procedures. The gray area is still concerning, but having proper documentation and maintaining the custodial relationship seems to be the safest approach until we get clearer IRS guidance. My attorney reviewed everything and feels confident it distinguishes from the McNulty fact pattern.

Has anyone tried TaxSlayer? My brother-in-law recommended it but I'm curious about real experiences before switching from TurboTax.

I made the switch from TurboTax to H&R Block's online service last year and was pleasantly surprised. The pricing was much more transparent - around $55 for federal and state with my small business income, compared to the $120+ I was paying with TurboTax after all their add-ons. What I liked most was their "second look" review feature where a tax professional actually reviews your return before filing. It caught a deduction I had missed for my home office expenses. The interface was pretty intuitive too, though not quite as polished as TurboTax. They do have some upsells, but they're much less aggressive about it than TurboTax. You can easily decline the extras without feeling like you're missing something critical. The import features worked well for my bank statements and investment documents too.

The IRS community wisdom on this is pretty clear - these letters are essentially automatic extensions the IRS gives itself when they're backlogged. It's probably, though not certainly, related to your change in filing status. Most people in the tax community know that the IRS verification systems don't always talk to each other effectively. You might be able to see your transcript, but that doesn't mean the specific department handling your return has completed their verification process. If you've received two 60-day letters, you're almost certainly in what's called the "Income Verification" queue, which is notoriously slow. The good news is that unless there's an actual discrepancy, these eventually resolve themselves without you needing to do anything.

I'm going through almost the exact same situation! Filed jointly for the first time after getting married in December, submitted our return on February 20th, and just got my second 60-day letter yesterday. Like you, I can access all our transcripts perfectly fine and everything looks normal. What's really frustrating is that both our employers are major companies (Fortune 500) that have been filing the same W-2 formats for decades, so it's not like there should be any mystery about our income verification. I've been wondering if it's some kind of systematic issue with their new marriage verification process. The first letter came exactly 3 weeks after filing, and this second one arrived 58 days later (so they're cutting it close on their own deadlines!). I'm starting to think these letters are just automated stall tactics while they work through whatever backlog they have. Has anyone had success getting actual explanations by calling the practitioner priority line? I have a CPA who might be able to get through faster than us regular folks.

Be careful with some of these approaches. I tried using the Taxpayer Advocate Service (TAS) route last month during peak filing season, and they've implemented strict case acceptance criteria. Their Internal Revenue Manual (IRM) section 13.1.7.2 specifically prohibits TAS from accepting cases where the taxpayer is simply trying to circumvent normal IRS channels. If your issue doesn't meet their definition of 'significant hardship' under IRC section 7811, you'll be redirected back to the main IRS queue with wasted time.

Last year I had a similar business tax issue and discovered that the IRS Practitioner Priority Service line (866-860-4259) can sometimes be more effective. They typically serve tax professionals, but I've found that if you're prepared, knowledgeable about your issue, and have all your business documentation ready, they often will assist you directly. I was transferred three times but eventually reached someone who resolved my S-Corp filing issue in one call. The key difference from my previous attempts was calling mid-week around 2pm Eastern time.

11 Does anyone know if the recent tax law changes affected the underpayment penalty thresholds at all? I thought I read something about them being more forgiving for 2024 taxes.

I'm going through something similar right now - divorced last year and completely missed updating my W-4. The quarterly penalty calculation mentioned above is spot on and really important to understand. One thing I learned from my tax preparer is that you should also check if you had any major changes in income during the year, not just withholding. If your income dropped significantly after the divorce (like losing a spouse's income or changing jobs), that can actually work in your favor for the safe harbor calculations. Also, don't forget to update your filing status to single or head of household if you have kids - that alone might change your tax liability enough to affect whether you even owe a penalty. The IRS is generally pretty reasonable about life changes like divorce as long as you document everything properly on Form 2210.