Has anyone used Rev. Proc. 96-10 for a partnership division? My understanding is it provides a safe harbor for certain types of partnership splits.

One thing that hasn't been mentioned yet is the importance of timing your division carefully. The IRS looks at the entire series of transactions, not just individual steps, when evaluating disguised sales under Section 707(a)(2)(B). Since you mentioned the real estate has significant appreciation, you'll want to be particularly careful about how debt allocations are handled. If any partner receives a reduction in their share of partnership debt as part of the division, that could be treated as a deemed cash distribution and trigger disguised sale treatment. Also, make sure to document the business purpose for the split thoroughly. The IRS is more likely to respect the transaction if you can show legitimate business reasons (like different investment strategies, geographic focus, or management philosophies) rather than just tax avoidance motives. Given the $875K value involved, I'd strongly recommend getting a second opinion from a tax professional who specializes in partnership taxation before proceeding. The potential tax consequences of getting this wrong could be substantial.

Something important that nobody has mentioned yet - make sure you're using the CURRENT W-7 form! The IRS updated the form in September 2021, and they will automatically reject applications using the old version. Also, when you're listing your reason for applying, check box "h" for "Other" and then write in "Exception 1(d) - Monetary Assets: Unclaimed Property" in the space provided. This makes it crystal clear from the start what you're applying for. In my case, I also included a cover letter explaining my situation in simple terms at the front of my application package. The cover letter referenced all the attached documents and how they supported my application under Exception 1(d). My approval came through in just 6 weeks.

This thread has been incredibly helpful! I'm dealing with a similar situation where I have unclaimed property from an old Wells Fargo account that was closed due to inactivity. The state is requiring an ITIN before they'll release the funds. Based on all the advice here, I'm planning to: 1. Use Exception 1(d) for monetary assets 2. Download the current W-7 form (Rev. September 2021) from the IRS website 3. Request a specific letter from the state treasurer that explicitly states an ITIN is required for my claim 4. Include a cover letter clearly explaining my situation One question though - for those who were successful, how long did it typically take to get the proper documentation from your state's unclaimed property office? I'm worried they might give me the runaround like they seem to do with a lot of people. Also, should I mention in my request to the state that the letter needs to be worded specifically for IRS ITIN requirements, or is it better to just ask for confirmation that an ITIN is needed without getting too technical?

This exact thing happened to me with E*TRADE last year! It was an absolute nightmare. They applied backup withholding to my entire trade amount for THREE MONTHS before it got sorted out. What fixed it: Called and specifically asked to speak to their "Tax Operations" department (not regular customer service). Had to explicitly tell them they were applying backup withholding to principal amounts incorrectly. Regular reps kept insisting it was correct until I got to someone who actually understood tax regulations. Good luck!

This is a really helpful thread! I'm a foreign investor who just opened a US brokerage account and I want to make sure I don't run into the same issues. From reading all the responses, it sounds like the key points are: 1. As a non-US person, I should file W-8BEN, not W-9 2. Backup withholding should NEVER apply to principal investment amounts - only to gains/dividends 3. If incorrectly applied, I need to specifically request a refund from the broker's Tax Operations department One question I still have: How can I verify upfront that my broker has my forms processed correctly before I start trading? Is there a way to confirm my account status to avoid this whole mess in the first place? I'd rather be proactive than deal with getting money back later. Also, does anyone know if different brokers handle this differently, or are the IRS rules pretty standard across all platforms?

Check if your housing might qualify as excludable under Section 119 of the tax code! If the housing was provided for the "convenience of the employer" and on the employer's premises, and you were required to accept the housing as a condition of employment, it might not be taxable. Worth looking into before you amend!

I went through something very similar last year with a tech company that forgot to report my relocation bonus. The whole process was honestly less scary than I expected once I got started. A few practical tips from my experience: First, gather all your documents from that tax year (original W2, W2C, your filed return, any records of the housing arrangement). The IRS will want to see everything matches up. Second, if you used tax software originally, most programs like TurboTax or H&R Block have tools specifically for amended returns that walk you through the W2C situation step by step. One thing that surprised me - I actually ended up getting a small state refund because the additional federal tax I owed put me in a higher bracket that qualified for a bigger state deduction. So it's not always doom and gloom! The interest on what you owe will probably be manageable since it's only been 3 years, not like 10. Definitely don't wait though. The company already sent the corrected info to the IRS, so their computers will eventually flag the mismatch anyway. Better to handle it on your terms.

One thing nobody's mentioned yet - what's the actual benefit you're trying to achieve with this structure? If it's just liability protection, there might be simpler ways to structure this. I had a Revocable Trust -> LLC structure for my business initially, and it was a huge headache for taxes. I ended up restructuring to simplify things. If it's for estate planning, have you considered whether a SMLLC owned by one spouse (with appropriate estate planning) might achieve your goals with less complexity? Or potentially an irrevocable trust structure if you're looking for asset protection?

Based on everything discussed here, it seems pretty clear that you'll need to file Form 1065 for your LLC. The consensus from multiple experienced folks is that the IRS will look through both disregarded entities (your revocable trust and the SMLLC) and see two ultimate beneficial owners in a non-community property state. I'd suggest getting this confirmed officially before filing, especially since you mentioned this is your first year with this structure. The penalty risks for filing incorrectly on partnership returns can be significant. Also, for next year's planning, you might want to evaluate whether this structure is still serving your needs. From what you've described about wanting probate avoidance and business continuity, there might be simpler ways to achieve those goals without the Form 1065 complexity. An estate planning attorney who works with business owners could probably show you some alternatives that accomplish the same objectives with cleaner tax reporting. Good luck with your filing - and congratulations on the successful Amazon FBA business!