This is exactly the kind of situation where getting professional help or using specialized tools makes sense. I went through something similar with multiple years of missing 8606 forms, and the complexity of calculating basis carryforward between years can get tricky fast. One thing I'd add to the great advice already given - when you file those standalone 8606 forms, make copies of everything and keep detailed records. The IRS systems don't always link these forms perfectly to your main tax records, so having your own documentation is crucial. Also, double-check your 2021 amended return to make sure the corrected 8606 properly reflects the basis from 2019 and 2020. If you didn't include that carryforward basis, you might need to amend 2021 again once you get the earlier years sorted out. The whole chain has to be correct for your basis tracking to work properly going forward.

One thing that hasn't been mentioned yet is the timing consideration for when you file these standalone 8606 forms. While you can file them at any time, I'd recommend getting them submitted sooner rather than later, especially for 2019 and 2020. The reason is that if you ever need to take distributions from your IRA or do Roth conversions, having your basis properly documented with the IRS becomes critical. I've seen cases where people waited years to file missing 8606 forms, then when they needed to prove their basis during a distribution, the IRS was more skeptical about accepting late-filed forms. Also, make sure you're using the correct version of Form 8606 for each tax year - don't use the current year's form for prior years. The IRS wants to see the form version that was actually in effect for that specific tax year. You can find prior year forms in the IRS forms archive on their website. One last tip: when you mail these forms, include a brief cover letter for each year explaining that you're filing a standalone Form 8606 to report nondeductible IRA contributions. This helps the IRS processor understand why they're receiving just this form rather than a complete return or amendment.

One thing everyone forgot to mention - if you decide to depreciate rather than using Section 179, and your business has a bad year or closes before the depreciation period ends, you can't just deduct the remaining value all at once. Something to consider if your business fluctuates a lot! This happened to my friend's videography business and he lost out on thousands in potential deductions.

Great question! Yes, you can absolutely deduct equipment purchases made with loan funds. The IRS doesn't care where the money came from - what matters is that it's a legitimate business expense. A few key points for your photography LLC: 1. **Section 179 vs Depreciation**: For $12,500 in equipment, you'll likely want to use Section 179 to deduct the full amount in the first year rather than depreciating over time. Much simpler and gives you the tax benefit immediately. 2. **Documentation**: Keep clear records linking the loan to the equipment purchases. Save receipts, invoices, and loan documents showing the funds were used for business purposes. 3. **Don't forget loan interest**: While the loan principal isn't deductible, the interest you pay on that business loan is a separate deductible expense throughout the life of the loan. 4. **Mixed-use equipment**: If any equipment might be used personally (like a camera you occasionally use for family photos), you can only deduct the business percentage. Since you're an LLC, you'll handle this on Schedule C of your personal return (assuming single-member LLC). The deduction will reduce your taxable business income, which flows through to your personal taxes. Definitely worth consulting a tax pro for your specific situation, but the basic principle is solid - loan-funded business expenses are still deductible business expenses!

Has anyone used TurboTax to claim a large worthless stock loss like this? I'm wondering if the regular version handles this or if I need to upgrade to their premium version. Last time I tried to enter something complicated like this, it kept giving me errors.

I'm sorry to hear about your situation with the First Republic Bank stock. This is unfortunately becoming more common with recent bank failures. One thing I'd add to the excellent advice already given - make sure you have proper documentation of the inheritance date and fair market value at that time. Since you inherited this 4 years ago, you'll need records showing the stock's value on the date of your family member's death (or the alternate valuation date if the estate elected that). This becomes your "stepped-up basis" for tax purposes. Also, don't rush to sell immediately. First Republic Bank went through a specific FDIC resolution process when it failed in May 2023, and shareholders typically received nothing. However, you should verify with your broker that there truly are no residual distributions expected before claiming it as completely worthless. If you do need to execute a sale, most brokers can handle transactions in defunct securities - they'll often sell for $0.01 per share or similar. The key is having the transaction recorded properly so you have documentation of the sale for your tax return. Given the size of this loss, I'd strongly recommend consulting with a tax professional who has experience with worthless securities and inheritance situations. The $417,000+ loss could provide significant tax benefits over many years if handled correctly.

One more option that hasn't been mentioned - if you remember the company's full legal name, you can try searching the Secretary of State's business records database for the state where the company was incorporated. Even if they went out of business, their registration records usually stay in the system and sometimes include the EIN or Federal Tax ID number. Each state has their own online database you can search for free. Also, if you had direct deposit from this employer, check your bank statements from 2022. Sometimes the company name on the deposit includes their EIN or at least enough identifying information that you could use to track it down through other means. Worth a shot before going through the more complex routes!

Another approach that worked for me when I had a similar situation - try searching for the company on LinkedIn or other professional networking sites. Even if the company is defunct, sometimes former employees still have it listed in their work history, and occasionally the full legal name or other identifying details are there that you can use to cross-reference with other databases. Also, if you had any 401(k) or retirement account with this employer, those documents almost always include the EIN. Check any old statements or rollover paperwork you might have saved. Same goes for any employee handbook or onboarding documents - HR departments typically include the EIN on various internal forms. One last thing - if you're really stuck and need to file soon, you can actually file your tax return without the W-2 by using Form 4852 (Substitute for Form W-2). You'll need to estimate your wages and withholdings based on your paystubs, but it allows you to file on time while you're still tracking down the official documents. The IRS will match it up with the actual W-2 data once they process everything.

I wish the tax code wasn't so unnecessarily complicated!! Why can't points just be points and deductions just be deductions? My freind got audited over this exact issue and the IRS agent didn't even understand it. He kept changing his answer!!!!

This is exactly the kind of situation where documentation is everything. I went through something similar last year with an $820k mortgage and $8,200 in points. The key thing I learned is to keep meticulous records of exactly how much of your loan went toward the home purchase vs. any improvements. Since you mentioned $50k went to renovations, that could actually work in your favor. The IRS treats home improvement debt differently - it's not subject to the same $750k cap as acquisition debt. So you'd potentially have $780k subject to the limit (not the full $830k), which would increase your deductible percentage. My advice: get your closing statement, contractor receipts, and any other documentation organized now. When your tax person gets back, they'll be able to properly allocate the points between acquisition debt and improvement debt. This could save you several hundred dollars in additional deductions. Don't just assume you're limited to the simple ratio calculation - the improvement portion changes everything.