Great discussion everyone! As someone who went through a similar partnership sale two years ago, I want to emphasize the importance of getting a professional Section 751 analysis done. I thought I understood the basics, but it turned out our manufacturing partnership had significant "hot assets" that I completely missed. We had accounts receivable that qualified under Section 751, plus some inventory that had appreciated substantially since we switched to FIFO accounting. About 30% of what I thought would be capital gains ended up being ordinary income taxed at much higher rates. The difference in my tax bill was over $15,000! Also, @Ravi, since you mentioned equipment loans - make sure you understand exactly how the debt relief is calculated. In our case, the partnership had recently refinanced, and the debt allocation among partners had shifted slightly from our original percentages. The buyer's attorney caught this during due diligence, but it could have been a nasty surprise at tax time. One last tip: if your partnership has made any Section 754 elections in the past (usually when partners have left), this can create additional basis adjustments that affect your calculation. Worth double-checking your partnership's tax returns from prior years.

As a newcomer to this community, I'm finding this discussion incredibly educational! I'm actually in the early stages of considering a partial sale of my partnership interest in a consulting firm, and reading through everyone's experiences has opened my eyes to complexities I hadn't even thought about. The debt relief aspect that @Astrid mentioned is particularly eye-opening - I would have completely missed that in my calculations. And @Ava's point about Section 754 elections from prior partner exits is something I need to investigate immediately, as we've had two partners leave over the past five years. I'm curious - for those who have been through this process, how far in advance did you start planning for the tax implications? It sounds like there's quite a bit of analysis that needs to be done before you can even accurately estimate your tax liability. Would you recommend getting professional help from the very beginning, or is there preliminary research/calculation that's safe to do on your own first? Thanks to everyone for sharing their experiences - this thread is going to save me from making some costly mistakes!

Has anyone checked if this is related to the verification issues mentioned on the TurboTax support forum? According to https://ttlc.intuit.com/community/tax-topics/help/refund-advance-delays/01/2023, some advance refunds are getting held up for additional identity verification steps that weren't required in previous years. Is there any notification in your TurboTax account about needing to verify identity?

Based on what everyone's shared here, it sounds like TurboTax's advance system is completely overwhelmed right now. I'd recommend checking three things immediately: 1) Log into your TurboTax account and look for any verification messages (like @Ravi Sharma mentioned - this caught a lot of people off guard), 2) Call the specific refund advance department at 800-446-8848 and ask for escalation if you've been waiting over 7 days, and 3) Double-check that all your personal info (especially address) matches exactly what's on file. The advance is totally separate from your actual IRS refund, so even though your return was accepted, the advance goes through TurboTax's lending partner which has its own approval process. Given that you need this for tuition next week, I'd definitely call tomorrow morning - don't wait for it to resolve on its own. Good luck!

Has anyone considered that maybe an LLC with S-Corp election could help with the self-employment tax issue? If the Airbnb activity is definitely a business and not just rental income, you could potentially save on SE tax by taking a reasonable salary and the rest as distributions.

This is such a common confusion! I went through the same thing when I started hosting. The key thing to understand is that the IRS uses a "facts and circumstances" test to determine if your Airbnb income is subject to self-employment tax. From what you've described about your sister's situation, she's likely crossing into self-employment territory. The combination of personal cleaning, welcome baskets, providing utilities, and active management suggests she's providing "substantial services" beyond just renting space. Here's what I learned matters most: if the average guest stay is 7 days or less AND you're providing services primarily for the guest's convenience (rather than just maintaining the property), it's usually considered a business activity subject to SE tax. The welcome baskets might seem small, but they're actually a red flag to the IRS because they show you're going beyond basic property rental into hospitality services. Combined with her doing all the cleaning personally, it really looks like active business income rather than passive rental income. My advice? Have your sister track everything carefully - guest stay lengths, time spent on management activities, and all the services she provides. This documentation will be crucial whether she ends up owing SE tax or if she ever gets audited.

Another option I don't see mentioned - check if your potential new employer offers an HDHP option you could enroll in immediately upon starting. Many employers have waived waiting periods for benefits during the pandemic and some have kept those policies. If your current coverage ends October 15th and new employer coverage can start October 16th, that would satisfy the continuous coverage requirement. Just make sure the new plan qualifies as an HDHP for HSA purposes - not all high-deductible plans do!

I want to add one more consideration that might be helpful - if you're planning to leave around October 15th specifically, you might want to think about pushing it to November 1st instead. Since HSA eligibility is determined by having HDHP coverage on the first day of the month, leaving mid-month in October could make you ineligible for the entire month of October. If you leave on October 15th and there's any delay getting new coverage started, you'd lose October eligibility even if you only had a few days gap. But if you can wait until November 1st, you'd maintain full October eligibility and then just need to ensure your new HDHP coverage starts November 1st with no gap. I know job timing isn't always flexible, but even a couple weeks could make a significant difference for your HSA testing period compliance. The penalties for breaking the testing period can be substantial, so it might be worth exploring if your departure date has any flexibility.

Has anyone mentioned the income phaseouts for child tax credits? This was a HUGE factor for us last year. If either of you is close to or over $200,000 in income (for single filers), the child tax credit starts phasing out. In our case, my partner makes about $210k and I make $155k. We found it was WAY better for me to claim both kids because I could get the full child tax credit while she was getting a reduced amount due to her income. Before you decide, calculate your modified adjusted gross income and check where you fall on the phaseout range. Could make a difference of thousands depending on your exact income levels.

Another important consideration that hasn't been mentioned yet is the Earned Income Tax Credit (EITC) if either of you qualifies. With two children, the EITC can be worth up to $6,728 for 2023, but it phases out at different income levels depending on filing status. For Head of Household filers with two children, the EITC phases out completely around $56,838 in earned income, while for single filers it's around $50,594. Given that you both earn in the six-figure range, you likely won't qualify, but it's worth double-checking since this credit can be substantial. Also, don't forget about the dependent care FSA (Flexible Spending Account) if either of your employers offers it. You can set aside up to $5,000 pre-tax for childcare expenses, which effectively reduces your taxable income. This works independently of who claims the children as dependents, so whoever has access to a dependent care FSA should definitely use it. Just remember you can't double-dip - if you use FSA funds for daycare, you can't also claim those same expenses for the Child and Dependent Care Credit. The FSA savings alone could be worth $1,000-2,000 depending on your tax bracket, so make sure to factor that into your planning for next year!