Unfortunately, there aren't many ways to spread out the gain from selling a single asset like your classic car over multiple years. The sale is treated as occurring in the tax year when the transaction closes, so the entire gain gets recognized at once. However, there are a few strategies you might consider: 1. **Installment sale method** - If the buyer is willing, you could structure the sale to receive payments over multiple years (like $50K this year, $45K next year). This would spread the gain recognition across tax years, but it does come with risks if the buyer defaults. 2. **Like-kind exchange (Section 1031)** - This generally doesn't apply to personal-use vehicles, but if you could argue the car was held for investment purposes (which might be difficult given it was a hobby project), you could potentially defer gains by exchanging into another qualifying asset. 3. **Charitable strategies** - If you're charitably inclined, you could donate a portion of the car's value to charity and sell the remainder, though this gets quite complex. For California specifically, yes, you're looking at some of the highest combined capital gains rates in the country. The timing strategy of waiting until January could be very beneficial if either of your incomes will be significantly lower next year. Also consider whether you have any capital losses to harvest from other investments before year-end to offset some of the gain. Given the complexity with state taxes, Medicare impacts, and the significant dollar amounts involved, a consultation with a tax professional who handles high-value personal property sales would definitely be money well spent before you commit to the sale.

Welcome to the community, Fatima! Great questions that really add to this discussion. For the installment sale method, yes, you'd need formal documentation even for something as "simple" as two payments. The IRS requires written agreements specifying payment terms, interest rates (using applicable federal rates), and what happens if payments are missed. You'd also need to calculate the gross profit percentage and recognize gain proportionally with each payment received. It's definitely not a casual arrangement - both parties need to understand the legal and tax obligations. Regarding the charitable donation strategy - you're absolutely right that donating to a qualified automotive museum or educational charity could provide a significant tax deduction based on fair market value. However, there are some important limitations: for non-cash donations over $5,000, you need a qualified appraisal, and deductions over $500,000 require additional IRS approval. Plus, if your adjusted gross income isn't high enough, you might not be able to use the full deduction in one year (though you can carry forward unused portions for up to five years). The key consideration is whether Ava and her husband need the cash now versus the potential tax savings over time. Given they mentioned wanting to pay down their mortgage, the immediate cash might be more valuable than the deduction benefits. One thing I'd add for anyone in this situation - document EVERYTHING about your restoration process going forward. Take photos, keep receipts, maintain a restoration log. Future you will thank present you for the organization when tax time comes!

Great question Oliver! This is one of the most confusing aspects of investment taxation, but once you understand it, you'll see why it's actually designed to benefit investors. The key point everyone's touched on is correct - your different types of investment income maintain their own tax treatment even when combined with your regular income. Think of it this way: the IRS calculates your total taxable income to determine your "tax profile," but then applies the appropriate rates to each income type separately. So if your total income (wages + short-term gains + long-term gains + qualified dividends) puts you in the 22% ordinary income bracket, here's what happens: - Your wages and short-term capital gains get taxed at ordinary income rates (10%, 12%, 22% on the appropriate portions) - Your qualified dividends and long-term capital gains get taxed at the preferential capital gains rates (0%, 15%, or 20%) The magic happens because even though you're in the 22% bracket for ordinary income, if your TOTAL income is still below the capital gains thresholds ($44,625 single/$89,250 married filing jointly for 2024), those qualified dividends and long-term gains are still taxed at 0%. This is why proper tax planning around investments can save so much money - you might be able to realize some gains or dividends in years when your total income keeps you in that 0% capital gains bracket!

This thread has been incredibly helpful! As someone who's been intimidated by investment taxes, seeing everyone break down the mechanics of how different income types are taxed has really clarified things for me. One thing that's becoming clear is that understanding these rules can lead to significant tax savings. The fact that qualified dividends and long-term capital gains can be taxed at 0% even when your ordinary income is in higher brackets is honestly amazing - I had no idea this was possible. For anyone else reading this who's feeling overwhelmed by investment taxes (like I was), the key takeaways seem to be: 1. Your total income determines your bracket position, but different income types use different tax rates 2. Long-term gains and qualified dividends get preferential treatment 3. The 0% capital gains rate can apply even if you're in the 22% ordinary income bracket 4. Strategic timing of when you realize gains can maximize these benefits I'm definitely going to be more intentional about tax planning going forward. Thanks to everyone who shared their experiences and knowledge - this community is fantastic for learning!

This has been such an educational thread! I'm dealing with a similar S-Corp NOL situation and had no idea about the complexity of basis tracking until reading everyone's experiences. One thing I'm still unclear on - when you're calculating your NOL carryforward amount, do you use the business loss amount from the K-1 directly, or do you have to use the amount that actually made it through to your 1040 after all the limitations? For example, if my S-Corp shows a $30K loss on the K-1, but I only have $20K in basis so I can only deduct $20K this year, does my NOL calculation use the $20K or the full $30K? And what happens to that suspended $10K loss - does it just sit there until I increase my basis in future years? Also, I'm curious about the timing of when to elect NOL carryforward vs. carryback. I know the TCJA eliminated most carrybacks, but I want to make sure I'm not missing any options that might be more beneficial than carrying forward. Thanks again to everyone who shared their experiences - this is exactly the kind of real-world guidance you can't find in the IRS publications!

This thread has been incredibly helpful! I've been dealing with S-Corp losses for the past two years and finally feel like I understand the process. One thing I want to add that might help others - make sure you're also considering the Section 1244 ordinary loss election if you qualify. If your S-Corp stock qualifies as Section 1244 stock (which many small business S-Corps do), you can treat up to $50K ($100K if married filing jointly) of stock basis losses as ordinary losses rather than capital losses when you dispose of the stock or it becomes worthless. This is different from the annual pass-through losses we've been discussing, but it's another layer of tax planning that S-Corp owners should be aware of. The ordinary loss treatment can be much more valuable than capital loss treatment since capital losses are limited to $3K per year against ordinary income. Also, I've learned from my CPA that keeping a running basis schedule in a simple spreadsheet has been a lifesaver. I update it every year when I get my K-1, and it makes tax prep so much smoother. After reading about everyone's audit experiences, I'm definitely going to be more diligent about keeping supporting documentation for every entry. Thanks to everyone who shared their experiences - this is exactly the kind of practical advice that makes a real difference!

Has anyone used TurboSelf-Employed for handling these kinds of business loan situations? I can never figure out where to enter loan proceeds vs. payments in the software and always worry I'm doing it wrong.

As someone who went through a similar learning curve with my consulting business, I'd recommend getting clear on the fundamentals before making any moves. The IRS treats loan proceeds and business expenses as completely separate things. Your $65k profit is taxable income period - doesn't matter if you use it to pay off loans, buy a yacht, or stuff it under your mattress. But here's what CAN help: if you have legitimate business expenses you were planning to make anyway (equipment, software, marketing, inventory), financing those purchases can preserve your cash flow while creating deductions. The wealthy don't avoid taxes by shuffling loan payments around - they strategically time business investments and use debt to acquire income-producing or depreciable assets. Big difference between that and trying to make loan repayments count as expenses (which they're not). My advice: talk to a tax professional about legitimate business investments you could make before year-end that would qualify for Section 179 or bonus depreciation. That's where the real tax savings come from, not from loan gymnastics.

I'm surprised nobody mentioned TaxAct Professional. It can handle trust returns and personal returns, and it's much more affordable than the big professional packages. I've used it for my own family trust and personal return for the past 3 years. You'll need to get the professional version rather than the consumer one, but it's around $200 total for all the returns you need. It's not Mac native though, so you'll still need that Windows emulator.

Based on your complex situation with two trusts plus personal returns, I'd actually recommend considering a hybrid approach. I've been in a similar position as trustee for multiple family trusts, and what worked best for me was using professional software for the trust returns but then importing the K-1 data into a consumer program for my personal return. For the trust returns specifically, I found that the AI-powered solutions like taxr.ai (mentioned above) or professional software like ProSeries give you the most accurate results for the complex trust accounting rules. The consumer programs like TurboTax just aren't built to handle the nuances of trust income allocation, especially when you're dealing with investment income versus IRA distributions with different tax treatments. One thing to keep in mind - since you're dealing with inherited IRA distributions based on life expectancy tables, make sure whatever software you choose is current on the SECURE Act changes. Some of the older professional packages haven't updated their life expectancy calculation modules properly. Also, given the complexity, I'd strongly recommend having at least a consultation with a trust tax specialist for your first year to make sure you're setting up the calculations correctly. You can then use that as a template for future years with whatever software you choose.