Another approach I've used successfully is to look at insurance replacement cost. When you insure your rental property, the insurance company only covers the building, not the land. My insurance policy had a replacement cost estimate that was much higher than what my tax assessment allocated to the building. I used this insurance valuation, along with some comparable vacant land sales in my area, to document a more reasonable land-to-building ratio. I ended up with about 80% building, 20% land (instead of the 60/40 split on my tax assessment). The key is having multiple forms of documentation that all point toward your conclusion. In my case, I had: 1. Insurance replacement cost document 2. Three comparable vacant land sales 3. A statement from a local realtor about typical land values in the area I've been doing this for three years now with no issues. Just make sure your allocation is defensible and not wildly out of line with reality.

Has anybody actually been audited after adjusting their land-to-building ratio? I'm thinking about doing this but I'm worried about raising red flags with the IRS. My tax assessment shows land at 40% but I think it should be closer to 20% based on vacant land prices.

Honestly the most straightforward way to handle this is to file your own taxes separately from your dad. You can tell him you want to learn financial independence without sharing the details. Use something like FreeTaxUSA which handles self-employment pretty well and is actually free (unlike some "free" services that charge for Schedule C). Just make sure to set aside about 25-30% of what you make for taxes since you'll owe both income tax and self-employment tax (15.3%) on your profits. First-time side hustlers often get shocked by that self-employment tax.

Just wanted to add that you should also consider what happens if your income grows beyond what you initially expect. I started selling handmade jewelry thinking I'd make maybe $1,000 a year, but ended up making $8,000 because demand was higher than expected. When you cross certain income thresholds, you might need to make quarterly estimated tax payments to avoid penalties. The IRS expects you to pay taxes as you earn, not just once a year. If you owe more than $1,000 in taxes when you file, they can hit you with underpayment penalties. Also, keep really good records from day one - screenshots of all payments, receipts for any business expenses, mileage if you drive anywhere for the business, etc. It's so much easier to track this stuff as you go rather than trying to reconstruct everything at tax time. A simple spreadsheet or even a notes app on your phone works fine when you're starting small.

I'm confused about something else related to this. If I contribute my personal laptop to my partnership but don't get any additional partnership interest, is this technically a donation? Does that mean I could claim a charitable deduction instead?

This is a great discussion that highlights how complex partnership contributions can be! I just wanted to add one practical tip that helped me when I contributed equipment to my consulting partnership last year. Make sure to document everything thoroughly at the time of contribution - take photos of the equipment, keep receipts, and get written acknowledgment from the partnership. I created a simple contribution agreement that included the original purchase price, current condition, and estimated fair market value (based on similar used equipment listings). This documentation became invaluable when our CPA prepared the partnership return and needed to set up the proper basis tracking and 704(c) allocations that @Elijah O'Reilly mentioned. Having everything documented upfront saved us time and potential headaches later. Also, don't forget that once the partnership owns the equipment, you'll need to be careful about personal use. The IRS frowns on partners using partnership assets for personal purposes without proper documentation and potential imputed income consequences.

Since everyone seems confused about the substantial presence test for F-1 students, here's what I learned after calling the IRS twice and talking to a school tax advisor: Years 1-5 on F-1: You are an "exempt individual" (not exempt from tax, but exempt from counting days for substantial presence test). File Form 8843 only. Year 6+ on F-1: You are no longer automatically exempt, so the substantial presence test applies. If you meet it (which you likely will after 183 days), you have two options: 1. File as a resident alien (subject to FICA and eligible for standard deduction) 2. Try to claim closer connection exception by filing both Forms 8843 AND 8840 The closer connection test looks at where your life is centered - bank accounts, property, family, future plans, etc. If they accept it, you continue filing as nonresident alien (no FICA tax, but also no standard deduction). The most common mistake I see is people only filing 8843 after year 5 without the 8840 form. That's not enough to claim the exception!

I went through this exact situation last year and want to share what worked for me. I was on F-1 status for 6 years and was terrified about the tax implications of becoming a resident alien. The key thing that helped me was understanding that the "closer connection exception" isn't just about paperwork - it's about your actual life circumstances. The IRS really does look at the totality of your situation. In my case, I had: - Maintained a bank account in my home country with regular deposits from family - Never applied for a green card or expressed intent to immigrate permanently - Kept my permanent address listed as my parents' home - Had no significant assets in the US (just basic student stuff) - Had concrete plans to return home after graduation/OPT I filed both Form 8843 and 8840 for my 6th year, including a detailed letter explaining my circumstances. The IRS never questioned it, and I saved about $2,800 in FICA taxes compared to filing as a resident. The most important advice I can give: document everything! Keep records of your foreign bank accounts, property ownership back home, family ties, etc. The burden of proof is on you to show your closer connection to your home country, so having solid documentation makes all the difference. Also, don't let tax software automatically decide your status - many programs aren't sophisticated enough to handle these exceptions properly.

Just to clarify for everyone, this rule about TINs being more important than exact names applies to all information returns (1099s, W-2s, etc). I used to stress about getting company names exactly right until my accountant explained that the matching system primarily relies on the TIN. This is why banks and employers are required by law to provide accurate TINs.

Great question! I dealt with this exact issue last year with a brokerage firm that had an incredibly long name. The key thing to remember is that the IRS matching system is primarily designed around the TIN (taxpayer identification number), not the exact business name. Here's what I learned from my experience: 1. **TIN is critical** - Make absolutely sure this 9-digit number is correct. This is how the IRS matches your reported income with what the payer filed. 2. **Partial names are fine** - Just enter as much of the company name as the character limit allows, starting from the beginning. Don't try to abbreviate or modify it. 3. **Match your 1099-INT** - Enter the name exactly as it appears on your form, even if it gets cut off in the software. Most tax software has reasonable character limits that accommodate standard business names, but some investment firms and financial institutions do have unusually long names. The IRS systems are built to handle these situations, so as long as your TIN is accurate and the beginning portion of the name matches what's on your 1099-INT, you shouldn't have any issues with processing or matching. Hope this helps put your mind at ease!