Be careful with the buildings aspect of your business sale. We sold our landscaping company last year and kept the main warehouse/office building. The buyer wanted to lease it from us, which seemed great at first. But we didn't account for how the business operations might change under new ownership. The new owners completely changed the business model which resulted in much heavier wear and tear on the property than we anticipated. We also had issues with them making unauthorized modifications to the building. Make sure you have a VERY detailed lease agreement if you're planning to keep the buildings and lease them to the buyer!

Great question! I went through a similar situation when we sold our family restaurant but kept the building. As others have mentioned, 1031 exchanges only work for "like-kind" real property, so your business assets (trademarks, IP, equipment, inventory) won't qualify. However, here's something that might help: if you're keeping the buildings and they're currently part of your business entity, you could potentially structure things to separate the real estate into its own entity before or after the sale. This would give you more flexibility for future 1031 exchanges if you decide to sell those buildings later and reinvest in other real estate. Also consider the timing - since you're keeping the buildings, you might generate rental income from leasing them to the buyer or other tenants. That rental income could help offset some of the tax burden from the business asset sale. Just make sure to get a solid lease agreement in place if the buyer wants to rent the space, and consider having the buildings appraised separately to establish their fair market value for future reference. One more thing - don't forget about installment sale treatment if the buyer is willing to structure payments over multiple years. This won't avoid the taxes entirely, but it can spread the tax burden over time which might keep you in lower tax brackets.

Thanks everyone for all the helpful advice! I wanted to give you an update on my situation. I finally received my CP12 refund yesterday - exactly 7 weeks from the April 22nd notice date, so a bit longer than the 4-6 weeks they promised but not too bad considering how backed up the IRS has been. I took several pieces of advice from this thread. I used the "Where's My Refund" tool that CosmicCaptain mentioned, which helped me track the progress. I also started implementing Ava's suggestions about documenting my farm business activities more thoroughly - created a separate business account and started keeping better records of my marketing efforts at farmers markets. One thing that really helped ease my anxiety was understanding that the loss carryover from 2022 doesn't count as a new loss year for the hobby farm rules. I was really worried about that, but now I feel more confident about my tax situation going forward. Miguel's warning about potential follow-up notices is something I'm keeping in mind - I'm not spending the extra refund money right away, just in case there are any additional adjustments. Better to be safe than sorry! This community has been incredibly helpful. It's nice to know there are people who understand these complex tax situations and are willing to share their experiences.

Glad to hear you got your refund! Seven weeks is actually pretty reasonable given the current IRS processing delays. Your proactive approach to documenting your farm business is smart - especially keeping that separate business account and tracking your farmers market activities. Just wanted to add one more tip for anyone else dealing with farm losses: make sure you're tracking the time you spend on farm activities separately from any personal enjoyment of the property. The IRS looks for evidence that you're putting in serious effort to make the operation profitable, not just maintaining a hobby farm. Keep a simple log of hours spent on business activities like planting, harvesting, marketing, bookkeeping, etc. Also, if you haven't already, consider joining your local farm bureau or agricultural extension programs. Membership and participation in these organizations shows the IRS that you're treating farming as a legitimate business and staying current with industry practices.

Just wanted to mention that if you're overwhelmed by the DIY approach, look into the Volunteer Income Tax Assistance (VITA) program or Tax-Aide through AARP. They sometimes help with back tax returns, not just current year filing. Also, the IRS has a formal program called "First Time Penalty Abatement" where they'll often waive penalties for the first time you've had filing/payment issues if you've otherwise been compliant in prior years. Definitely worth asking about if this is your first time having tax troubles.

One thing I haven't seen mentioned yet is the importance of filing in the correct order - you'll want to file your oldest returns first and work your way forward to the most recent year. This is because each year's tax calculation can be affected by carryforwards from previous years (like capital losses, charitable contributions, or net operating losses). Also, if you had any estimated tax payments or extensions filed for any of those years, make sure to include that information on your returns. The IRS already has records of any payments you made, so you want to make sure you get credit for them. Another tip: when you do file all these back returns, send them via certified mail with return receipt requested. This gives you proof of when the IRS received them, which can be important for penalty calculations and establishing your "good faith" effort to come into compliance voluntarily. The process feels overwhelming now, but once you get started and have a system in place, it goes faster than you'd expect. You've got this!

Quick tip for new S Corp owners: save 30-40% of ALL your profits in a separate account for taxes. Better to have too much saved than not enough! My first year with an S Corp I got KILLED with taxes because I didn't realize I needed to make estimated payments.

As someone who just went through this exact same confusion last year, here's what I wish someone had told me upfront: **For YOU personally:** Make quarterly estimated payments using Form 1040ES. You can pay online at irs.gov/payments. Set up an account and it's pretty straightforward once you find the "Make a Payment" section. **For the S Corp:** No quarterly income tax payments needed, but you DO need to handle payroll taxes if you're paying yourself a salary. Use EFTPS (Electronic Federal Tax Payment System) for employment tax deposits. **Estimating when you're new:** I used the "annualized income installment method" - basically, I calculated my tax liability based on actual income earned each quarter instead of trying to guess the whole year. Form 2210 has the worksheet for this. **Pro tip:** Open a separate business savings account and automatically transfer 35% of every deposit. This covers federal taxes, state taxes, and self-employment taxes on pass-through income. Adjust the percentage based on your tax bracket, but 35% kept me safe in my first year. The IRS has a pretty decent S Corp tax guide (Publication 589) that explains the pass-through taxation and salary requirements in plain English. Way better than trying to piece it together from random articles online!

Just to add one more consideration - make sure you're documenting this transition properly beyond just the tax forms. Since the departing partners are becoming tenants in common rather than partners, you should have: 1. An amendment to the partnership agreement documenting the withdrawal 2. A deed transferring the appropriate property interests 3. A new TIC (tenants in common) agreement for all four owners This helps substantiate the tax treatment and ensures everyone understands their rights and responsibilities going forward. The K-1 reporting is important, but the legal documentation is equally crucial.

This is a great discussion covering all the key technical aspects! Just wanted to add one practical tip from my experience with similar situations in ProConnect: Before you process the property distribution in the software, make sure to run a detailed partner capital account reconciliation report. This will show each partner's outside basis components before the distribution, which is crucial for calculating the correct basis adjustments. Also, when you're in the K-1 distribution section and selecting the property from the asset list, pay close attention to how ProConnect allocates any accumulated depreciation. I've seen cases where the software doesn't properly split the depreciation between distributed and retained portions, especially when only part of a property's ownership is being distributed. One more thing - after processing everything, generate a detailed K-1 with attachments to review exactly what statements ProConnect is creating. You may need to customize or supplement these to ensure they include all the required details about the property's characteristics, holding period, and any special allocations. The learning curve is steep with these complex distributions, but once you work through one properly, the process becomes much clearer for future cases!