One thing nobody's mentioned yet - make sure your SMLLC actually qualifies for S-Corp status! You need to meet the requirements like having only allowable shareholders (individuals, certain trusts, estates), no more than 100 shareholders, only one class of stock, and not be an ineligible corporation. I've seen people go through this whole process only to find out their LLC wasn't eligible in the first place.

I'm going through a very similar situation right now! Filed as SMLLC for two years, just submitted my Form 2553 late election last month. What really helped me was getting clarity on the "reasonable cause" requirement - I focused on explaining how my business income had grown substantially and I only recently learned about the self-employment tax savings potential of S-Corp status through a tax seminar. One tip I learned: the IRS is generally more lenient if you can show the election makes sense for your current business situation rather than just saying you missed the deadline. Also, I requested an effective date of January 1st of this year (not retroactive) specifically to avoid the headache of amending previous returns. My accountant said this approach has a higher approval rate since it doesn't create extra work for the IRS processing center. Still waiting to hear back, but feeling more confident after reading everyone's experiences here. Good luck with yours!

Anyone recommend a good tax software that handles rental property sales well? I tried TurboTax last year and it totally messed up my depreciation recapture calculations.

I went through a similar situation last year and learned some hard lessons about capital gains planning. While you can't directly offset the gains from your sold property with improvements to other properties, there are still some strategies worth considering for your current situation. First, make sure you're properly accounting for all the capital improvements you made to the property you just sold - these should increase your basis and reduce your taxable gain. Things like major renovations, roof replacement, HVAC systems, etc. can all be added to your cost basis. For your other properties, those improvements you're planning ($7,800 for flooring, $9,200 for the deck) will still benefit you tax-wise through depreciation over time. Just make sure to keep detailed records and receipts for everything. One thing to consider: if you have other investments showing losses this year, you might be able to harvest some capital losses to offset your rental property gains. Also, depending on your income level, you might qualify for the 0% capital gains rate on a portion of your gain. The tax code around rental properties is complex, so it might be worth consulting with a tax professional who specializes in real estate to make sure you're not missing any legitimate strategies for your specific situation.

Don't forget that for some assets like real estate, you can often get historical appraisals done retroactively. We had a commercial property in my parents' trust, and we hired an appraiser who specialized in retrospective valuations to determine what it was worth when my dad died 9 years ago.

One thing that hasn't been mentioned yet is the importance of getting a Form 706 (United States Estate Tax Return) if one was filed for either parent. Even if the estate wasn't large enough to require filing, many attorneys recommend filing anyway specifically to establish the stepped-up basis values for inherited assets. If a Form 706 was filed for your father in 2016, it would contain the fair market valuations of all his assets as of his date of death - this becomes your stepped-up basis documentation. The same applies for your mother's estate in 2023. These forms are incredibly valuable for exactly the situation you're describing. If no Form 706 was filed, you might still be able to file a protective election or late-filed return in some circumstances. This is definitely something to discuss with a tax professional, as the rules can be complex and there are time limitations involved.

What happens if you e-file but can't pay anything at all when you file? I'm in a really tight spot financially right now, but expect to be in a better position in about 2 months. Should I still file now?

This is exactly the kind of advice that needs to be shared more widely! I'm a tax preparer and I see this panic response every single year - people get scared by a big tax bill and think not filing will somehow make it go away. It never does, and it always makes things so much worse. One thing I always tell my clients is that the IRS is actually pretty reasonable to work with if you're proactive and honest about your situation. They'd much rather have you file on time and work out a payment plan than chase you down later for penalties and interest that have compounded for months. Also wanted to mention - if you're self-employed or have significant 1099 income, definitely look into making quarterly estimated payments next year. It's so much easier to manage four smaller payments than one big shock in April. The IRS has a safe harbor rule where you generally won't owe penalties if you pay at least 100% of last year's tax liability (or 110% if your prior year AGI was over $150K) through withholding and estimated payments. Beth, thank you for posting this - hopefully it saves some people from making a very expensive mistake!

Has anyone tried the alternative of using the individual QBI worksheet for each business but then going into the calculation worksheet form and manually overriding the QBI amount? That's what I've been doing, but I'm not sure if it's the "official" approach that ProSeries recommends.

I've been dealing with this same QBI aggregation headache in ProSeries for the past two seasons. What's worked best for me is a hybrid approach combining several of the methods mentioned here. First, I complete each business activity separately in their respective forms (Schedule C, E, etc.) to get the base QBI calculations. Then I use the QBI calculation worksheet override feature to input the aggregated amount, but I also create a comprehensive supporting statement that includes: - The specific election under Reg. 1.199A-4(b)(1) - Detailed business descriptions and how they meet common control/ownership tests - A reconciliation table showing individual vs. aggregated QBI amounts - Clear documentation that this is a software limitation workaround, not a substantive tax position The key insight I've learned is that the IRS doesn't care how your software handles the calculation as long as your tax position is correct and well-documented. I attach this as a PDF statement through the Forms menu, and it e-files without issues. I've had about 15 clients use this approach over two years with zero problems. The documentation takes maybe 30 minutes to prepare once you have a template, which beats the alternative of paper filing or switching software entirely.