Has anyone successfully claimed property that was already "in process" by someone else? I'm dealing with a similar situation with my grandmother's unclaimed insurance policy, and the state says someone else initiated a claim 3 months ago, but they won't tell me who.

I'm dealing with something very similar right now. My dad passed away 2 years ago and I just discovered there's unclaimed property from his old job showing as "in process" when I tried to claim it. Like you, I'm the only heir (my mom predeceased him) and I definitely haven't filed anything before. What's really frustrating is that the state website gives you almost no information about what "in process" actually means or how long it's been that way. I called the unclaimed property office twice and got two different answers - one person said it could mean someone started a claim but didn't finish it, another said it might just be their internal processing status. I ended up submitting my claim anyway with all my documentation (death certificate, birth certificate, his will, etc.) and included a cover letter explaining that I'm the sole legal heir and asking them to contact me if there are any issues with conflicting claims. Haven't heard back yet, but I figure it's better to get my claim in the system rather than wait and potentially miss out. Have you checked if there might be other relatives who could have a claim? Even distant ones sometimes come out of the woodwork when there's money involved, unfortunately.

Just be careful about taking distributions without paying yourself a reasonable salary first. The IRS really scrutinizes this with S Corps since it's a common area of abuse. If they determine your salary is unreasonably low, they can reclassify all those distributions as salary retroactively and hit you with back taxes and penalties.

I was in a very similar situation when I started my consulting practice! One thing that really helped me was understanding that the "reasonable salary" doesn't have to be perfect from day one - you can adjust it as you learn more about your business. Since you're already bringing in consistent $8k/month from consulting, I'd suggest starting with around $4,500-5,000 monthly salary (which aligns with what others have suggested) and then taking distributions for the remainder as needed for your living expenses. The key is being able to justify your salary if questioned. Document comparable salaries for consultants in your field and location - sites like Glassdoor, PayScale, or even job postings can help establish what someone with your skills would earn as an employee. Also, don't let the money just sit there stressing you out! You can absolutely start paying yourself through a payroll service like Gusto while you wait for your CPA to have more availability. Just keep good records and be prepared to adjust if they recommend something different later.

Don't forget to check if your state has also assessed late filing penalties! I went through this exact thing last year, got the federal penalty abated through reasonable cause, and then two months later got hit with state penalties for the same late filing. Had to go through the whole process again with the state tax agency.

Just wanted to share that I went through something very similar with my partnership return last year. We had delayed 1099s from a major client who completely messed up their year-end reporting, and I ended up with a $1,800 penalty for filing 6 weeks late. I wrote my own reasonable cause letter and it worked! The key things I included were: 1) A clear timeline showing when we should have received the 1099s vs when we actually got them, 2) Documentation (emails) showing we had requested the forms multiple times, 3) Proof that we filed immediately upon receiving the missing documents, and 4) Our clean compliance history for previous years. I addressed the letter to the correspondence address on the penalty notice, included all our partnership details, and sent it certified mail. It took about 8 weeks, but they fully abated the penalty. The IRS agent I eventually spoke with said that third-party document delays are actually one of the most common and accepted reasonable cause situations. Don't let the CPAs scare you into thinking this is too complicated to handle yourself - if you can clearly explain what happened and provide some basic documentation, you have a really good shot at getting this resolved without paying professional fees that exceed the penalty amount.

One thing nobody's mentioned - if you're exercising underwater ISOs, make sure to check if your company might offer a re-pricing or exchange program. Some companies will cancel underwater options and reissue at a lower strike price, which might be better than exercising underwater options. Worth asking your HR or stock admin before making any moves.

Great discussion everyone! I've been dealing with a similar underwater ISO situation and wanted to add one more consideration that helped me make my decision. Even though there's no immediate AMT impact for exercising underwater ISOs, you should also factor in your company's 10-year option expiration timeline. In my case, some of my underwater ISOs were granted 7+ years ago and were approaching expiration. Since there's no tax penalty for exercising underwater, I decided to exercise those older grants to at least convert them to actual shares before they expired worthless. This way, if the stock does recover in the next few years, I'll benefit from any appreciation above my strike price. The key insight for me was realizing that letting underwater options expire is a guaranteed loss, but exercising them (even at a loss) at least gives you a chance to recover if the company turns around. Obviously only do this with money you can afford to lose, but it's another angle to consider in your planning.

Has anyone mentioned the "ownership test" exception? I think there's something where if one spouse meets requirements and the other doesn't, you might still qualify. I know OP isn't talking about spouses, but there might be a similar provision for family members? Not sure tho.

One thing that might help your situation is the "step-up in basis" rule if your mom passes away while you still own the property together. I know that's not something anyone wants to think about, but it's important to understand all your options given your difficult financial situation. Also, have you considered doing a 1031 exchange? If you're buying another property immediately, you might be able to defer the capital gains entirely. The new property would need to be of equal or greater value and you'd have strict timing requirements (45 days to identify replacement property, 180 days to close), but it could completely eliminate your current tax burden. Given that you mentioned you're planning to buy a smaller place outright, this might not work since you'd need to reinvest all the proceeds, but it's worth exploring with a tax professional. Sometimes restructuring the timing of purchases can save significant tax dollars. The unemployment and health issues you mentioned should definitely qualify for the unforeseen circumstances exception. Make sure you document everything - medical records, unemployment benefits, job loss documentation, etc. The IRS is generally sympathetic to these situations when properly documented.