Has anyone used the "Safe Harbor" method for reporting this? My accountant mentioned it might be easier than trying to calculate everything precisely, especially since my renovation invoices weren't all perfectly organized.

This is a great question that many rental property owners face! Just to clarify a few key points that haven't been fully addressed: 1. **Timing matters**: Since you stopped renting the property in mid-2020 but didn't sell until 2021, you'll need to be careful about the "placed in service" vs "conversion" dates when calculating your depreciation recapture. 2. **Renovation costs**: All your renovation costs from 2020-2021 do increase your basis, even though the property wasn't being rented during that time. These are capital improvements that reduce your overall gain. 3. **Form 4797 is correct**: As others mentioned, you'll use Form 4797 even though you weren't actively renting in 2021. The property's rental history makes this the appropriate form. 4. **Don't forget state taxes**: While everyone's focused on federal treatment, make sure to check your state's rules for depreciation recapture - they don't always follow federal guidelines exactly. One thing I'd suggest is gathering all your depreciation schedules from 2019-2020 to ensure you're using the exact amount you actually claimed, not an estimate. The IRS has records of what you deducted, so accuracy here is crucial to avoid any discrepancies.

I'm in a very similar situation and ended up finding a middle-ground approach that worked well. Since you mentioned having a net loss and not owing any taxes, you might consider including just the first few pages of transactions as a "sample" along with a summary sheet showing your totals. I created a cover letter explaining that due to the volume of wash sale transactions (all properly calculated and reported on Schedule D), I was providing a representative sample and complete summary, with full details available upon request. I also included a simple table showing total proceeds, total cost basis, wash sale adjustments, and net loss - basically everything that feeds into your Schedule D. The key is making sure your Schedule D and Form 8949 totals are absolutely correct, since that's what the IRS computers will be checking against their broker reports. I mailed mine in February and it was processed normally within 6 weeks. This approach acknowledges the IRS requirements while being practical about the paper volume. Given that you're showing a loss and not claiming any refund related to the trading activity, the risk seems minimal. Just keep all your detailed records organized in case they ever ask for them (which is unlikely for a loss situation). Also definitely look into getting that ITIN for next year - it'll save you so much hassle going forward!

I'm a tax professional who deals with these complex paper filing situations regularly. Here's what I recommend based on your specific circumstances: Since you have a net loss and aren't claiming any trading-related refunds, you have more flexibility than someone with gains. The IRS is primarily concerned with accurate reporting of totals on Schedule D and Form 8949, which match their broker reports. For your situation, I'd suggest this approach: 1. Include the first 2-3 pages of transactions as examples 2. Create a clear summary page showing: total proceeds, total cost basis, wash sale adjustments, and net loss 3. Add a brief cover letter stating "Due to volume of wash sale transactions, complete details available upon request per IRC Section 6001" 4. Ensure your Schedule D totals match exactly I've had dozens of clients use this method successfully over the years. The key reference is IRC Section 6001, which requires you to keep records but doesn't mandate submitting every page with your return. Print double-sided on heavier paper (24lb minimum) to prevent scanner issues. Mail via certified mail with return receipt for peace of mind. For next year, definitely pursue that ITIN for your spouse - it'll eliminate this paper filing requirement entirely. Form W-7 can be submitted with your 2024 return. The forest will thank you, and the IRS processing center will too!

Has anyone used the "zero out retained earnings" approach with TurboTax for their final S-Corp return? My accountant mentioned this but didn't explain how to actually do it in the software.

I went through this exact same situation when closing my S-Corp earlier this year. The balance sheet errors in TurboTax are usually caused by not properly accounting for where your cash went when you distributed it to yourself. Here's what worked for me: In TurboTax, you need to record that $4,200 as a "Distribution to Shareholders" under the equity section, not as an expense. This creates the proper offsetting entry that balances your books - cash goes down by $4,200, and shareholder equity (retained earnings) also goes down by $4,200. For the disposed assets, since you mentioned they were old equipment, make sure you're removing both the original cost AND the accumulated depreciation from your books. If they were fully depreciated, this should net to zero impact. One thing that caught me off guard - make sure your final balance sheet shows zero equity at year-end if you're completely liquidating. All retained earnings need to be distributed out to shareholders for the books to properly reflect a dissolved corporation. The IRS has specific requirements for S-Corp dissolution, so double-check that you're filing Form 966 in addition to your final 1120-S return. Good luck with the closure!

Brady, congratulations on your retirement! This is such an important question and I'm glad you're thinking about it proactively. I just went through this same process about a year ago and learned a lot through trial and error. The 10% default at Fidelity is really just their conservative baseline - it's definitely not tailored to your specific tax situation. What I found is that the right withholding percentage depends heavily on your total retirement income picture, not just the IRA withdrawal itself. A few key things that influenced my withholding decision: - Whether you're taking Social Security immediately (and if so, how much will be taxable based on provisional income rules) - Any pension or 401k distributions you're also taking - Your state's tax treatment of retirement income - Whether you're married filing jointly or single - Any other income sources like part-time work or investment dividends I initially started with 12% withholding but had to bump it up to 19% once I realized my Social Security benefits were going to be partially taxable due to my combined income level. The interaction between different retirement income sources can really surprise you if you're not expecting it. My suggestion would be to do a rough tax projection for your full year including all income sources, then work backwards to figure out what withholding percentage from your IRA would cover your expected liability. You can always adjust it mid-year through Fidelity's website if needed. Are you planning to start Social Security right away, or do you have other retirement income sources to factor in? That would help give you a better sense of whether 10% is in the right ballpark.

Brady, congratulations on your retirement! This is such a smart question to ask early on. I just went through this exact same process about 8 months ago when I started my Fidelity IRA withdrawals. The 10% default is definitely not one-size-fits-all. What I learned is that you really need to look at your complete tax picture for the year. IRA withdrawals are taxed as regular income, so they stack on top of everything else - Social Security, any pension income, part-time work, investment gains, etc. I initially thought 10% would be enough, but once I factored in my Social Security benefits becoming partially taxable (due to the provisional income thresholds), I realized I needed to withhold 16%. The Social Security taxation rules can really catch you off guard if you're not expecting them. Here's what helped me figure it out: - I listed all my expected income sources for the year - Used a retirement-specific tax calculator (the regular IRS one doesn't handle Social Security taxation well) - Considered my state's tax treatment of retirement income - Started a bit conservative since you can always adjust the withholding percentage online with Fidelity My advice would be to do a comprehensive tax projection for your first retirement year including all income sources, then work backwards to determine the right withholding percentage. It's much better to slightly over-withhold your first year than get hit with underpayment penalties. What other retirement income are you expecting this year besides the IRA? That'll help determine if 10% is even close to the right amount for your situation.

This happened to me too! My transcript showed $0 but I kept getting notices. Turns out there was a penalty assessment that hadn't updated on the transcript yet. I'd definitely recommend getting a tax professional to help sort this out, or try one of those transcript analysis tools people are mentioning. Don't ignore it though - they can definitely offset your refund even if the transcript looks clean right now. Better to deal with it upfront than lose your refund later!

This exact situation happened to my sister last year! Her transcript showed $0 but she kept getting CP14 notices claiming she owed money. Turns out the IRS had processed an amended return that created a balance, but it took almost 2 months to show up on her transcript. During that time, they definitely can and will offset your refund even if the transcript shows zero - the notices take priority over what you see online. I'd recommend calling the balance due number on the notice (usually shorter wait times than the main line) or getting your transcripts professionally analyzed to see what's really happening behind the scenes. Don't wait though - if there's truly a balance, interest keeps adding up daily! 😬