This thread is super helpful. Another advantage no one mentioned - asset protection. Having your LLC receive the K-1 adds another layer of protection between your personal assets and any practice liabilities. This is separate from malpractice concerns. I've had my LLC receive K-1s from two different medical groups for 5+ years without issues. The setup costs were minimal compared to the benefits.

Great discussion here! I'm also a physician looking into this structure. One thing I'd add is to make sure you understand the state-specific implications. Some states have different rules for professional LLCs or additional licensing requirements when a professional service is provided through an entity rather than directly by the individual. In my state (Texas), I had to register my LLC as a Professional Limited Liability Company (PLLC) and ensure it was properly licensed to provide medical services. This added some paperwork but wasn't a deal-breaker. The state medical board also had to approve the arrangement since technically the PLLC becomes the entity providing medical services. Also, regarding the vehicle expenses mentioned in the original post - this can be a significant benefit. I've been able to deduct 100% of my vehicle expenses for medical conferences, hospital visits, and practice-related travel through my PLLC, whereas as an individual I was limited to the unreimbursed employee expense deductions (which were mostly eliminated after 2017 tax changes). The key is having good documentation and making sure everything is properly structured from day one. Worth consulting with both a tax attorney and your state medical board before making the switch.

Has anyone successfully disputed a CP-2000 and had the amount reduced? Mine says I didn't report stock sales but I definitely included them on my Schedule D. I'm thinking maybe I made a typo on a cost basis or something?

I went through this exact same situation last year with a CP-2000 notice for about $1,800. The key thing to understand is that your online account showing $0 is completely normal - the CP-2000 is just a proposed assessment, not an actual bill yet. First, carefully review the notice to see exactly what income or deductions they're questioning. In my case, it was unreported 1099-MISC income from freelance work that I thought I had included but apparently miscategorized. If you agree with their assessment, sign the response form and either pay the full amount or set up a payment plan. If you disagree (even partially), gather your supporting documents and write a clear explanation of why their calculation is wrong. Whatever you do, don't ignore it! The 30-day response deadline is firm, but you can call the number on your notice to request an extension if you need more time to gather documents. I ended up agreeing with about 60% of their assessment after proving I had reported some of the questioned income correctly.

Which tax software handles LLC expenses the best? I've been using TurboTax but I'm not sure if it's asking all the right questions about my business deductions.

Speaking from experience as someone who went through this exact situation - you're not alone in this confusion! The key thing is to get organized now rather than panic. Here's what I'd prioritize: First, create a separate business checking account immediately. Going forward, ALL business expenses should go through this account. For past mixed expenses, go through your statements line by line and create a detailed spreadsheet marking each expense as personal or business with a brief note about the business purpose. For your laptop, the 70/30 split is correct - you can only deduct 70% as a business expense. Keep documentation of how you calculated that percentage in case of questions later. Regarding your home office, the "exclusive use" test is important. If family occasionally uses it, you might not qualify for the full deduction, but you could still claim it if the primary use is business. Consider the simplified method ($5/sq ft up to 300 sq ft) to start. Don't stress too much about past mistakes - the IRS understands that small business owners sometimes mix expenses initially. The important thing is showing good faith effort to separate them going forward and having reasonable documentation for what you claim. Consider hiring a CPA for this first filing since you have mixed expenses. The cost is deductible and the peace of mind is worth it!

Don't forget to also look at your state tax rules! I'm in California and our rules for business deductions sometimes differ from federal. I had zero income in my consulting business in 2023 but was able to carry forward some of those losses to offset income when I started making money again in 2024.

Sarah, you're definitely not alone in this situation! I went through something similar with my freelance graphic design business a couple years ago. Zero income but thousands in legitimate expenses. The key thing is documenting your profit motive. Keep records of all your client outreach efforts - emails, proposals sent, networking events attended, website analytics showing you're actively marketing, etc. I created a simple spreadsheet tracking my business development activities each week, which really helped when I had questions about my deductions. Also consider joining professional associations in your field if you haven't already. The membership fees are deductible business expenses, and it shows you're serious about your profession. I joined the local chamber of commerce and a digital marketing group - both were great for networking and added credibility to my business operations. One more tip: if you're using part of your home exclusively for business, make sure you're claiming the home office deduction properly. Even with zero income, this can help establish that you have a dedicated business space, which supports your case that this is a legitimate business operation.

One thing nobody's mentioned - make sure you consider state tax implications too! Some states don't fully conform to federal treatment of Real Estate Professional status. I had a client in California who qualified federally but still had limitations at the state level. Also, if they're planning to expand their portfolio in 2025, they should start keeping track of their time spent researching properties, meeting with realtors, securing financing, etc. While these hours don't count toward 2024's 750-hour requirement, having this documentation ready for 2025 will strengthen their position going forward. Another consideration: have them create a formal business entity for their real estate activities. While not strictly necessary for Real Estate Professional status, having an LLC or other formal business structure helps establish the "trade or business" aspect rather than just being an investment activity.

Great discussion here! I want to add something that might help with the audit risk concern - documentation timing is absolutely critical. Since your client has already tracked 750+ hours, make sure those logs were created contemporaneously (at the time the work was done) rather than reconstructed later. The IRS can often tell the difference. Also, regarding the single duplex concern - I've seen successful Real Estate Professional claims with just one property when the taxpayer was doing significant rehab or dealing with high-maintenance situations. The key is demonstrating that this truly constitutes a "trade or business" rather than passive investment management. One practical tip: have your client start photographing their work as they do it, not just before/after shots. Time-stamped photos of them actually performing repairs, dealing with tenant issues, etc. can be powerful evidence if audited. And make sure they're documenting tenant interactions - phone calls, texts, emails about maintenance requests, lease renewals, etc. Since they're planning to expand, I'd also recommend they start treating this more formally as a business now - separate bank account, formal record-keeping system, maybe even business cards. This helps establish the "trade or business" nature of their activities.