What about property taxes paid over the years? Do those count as part of the basis? And if she doesn't have receipts for improvements made a long time ago, is there any way to still claim them?

Property taxes paid over the years unfortunately don't increase your basis - they're either deducted as an expense in the year paid (for investment property) or taken as an itemized deduction on Schedule A (for personal property). For improvements without receipts, you're not completely out of luck. You can create a reconstruction of costs using reasonable estimates. Take photos of the improvements, get statements from contractors who did the work if possible, or find comparable costs for similar improvements during the same time period. The IRS prefers documentation, but they recognize that records from many years ago might not be available. Just be reasonable with your estimates and be prepared to explain your methodology if questioned.

The capital gains tax rates are the same for vacant land vs. houses - it's based on your income and how long you've owned it, not the type of property. The big difference is you can't claim the primary residence exclusion ($250k/$500k) on vacant land since nobody lived there. Also, undeveloped land typically has fewer improvements you can add to the basis compared to a house where you might have done renovations, replaced a roof, etc. But things like clearing, grading, utility connections, surveys, and access roads still count!

8 That's interesting. So if I had moved into the house instead of selling my share to my brother, I could have potentially sold it tax-free later? Do you know if the 2-year clock would start from when my dad passed away or would time he spent there count too?

10 The 2-year clock would start when you actually owned the house, so from the time you inherited it. Your father's time living there wouldn't count toward your ownership period. And yes, if you had moved in and lived there for at least 2 years, you could have potentially excluded up to $250,000 of gain when selling. But remember, with inherited property, your basis is stepped up to the fair market value at date of death anyway, so you'd only pay taxes on appreciation that occurred after you inherited it.

11 Good point! I live in California and don't think we have a state inheritance tax, but I'll double check. Does anyone know which states have inheritance taxes?

25 Only six states still have inheritance taxes: Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania. Each state has different rates and exemptions. Some exempt close relatives entirely while others have lower rates for them. If you're in California, you're right that there's no state inheritance tax there. But always good to verify based on where the property was located, not just where you live. The tax typically applies based on where the deceased person lived or where the property is located.

That's a great point! I did move about a year and a half ago, and while I used my new address on last year's return, I never submitted the specific change of address form. Maybe that's why I didn't get the PIN letter. Would updating my address now help me get this year's PIN, or is it too late for that?

Updating your address now won't get them to automatically send a new PIN letter for this year, unfortunately. The system doesn't work that way. But it's still worth updating your address for future communications. For your current situation, your best bet is still to retrieve the PIN online using the "Get an IP PIN" tool or contact the specialized unit as others have suggested. The PIN exists in their system assigned to you - you just need to retrieve it since the letter didn't reach you.

Same here! Never got my letter but retrieved it online. Just make sure you create an ID.me account first if you don't already have one - that's required for accessing the IRS online account services now.

Would increasing business expenses in the S-Corp help too? Like could the company buy new equipment or something in that year to reduce the pass-through profits?

Increasing legitimate business expenses would absolutely help reduce the S-Corp's net profit, which would mean less pass-through income on your personal return. Section 179 deductions for equipment purchases can be particularly effective for this. Just make sure any expenses are ordinary and necessary for your business - don't go buying equipment you don't actually need just for tax purposes, as that could raise red flags.

This is actually really important. My tax advisor told me the same thing. The 10-year rule doesn't necessarily mean you have to take it all at once. You can often spread distributions over the 10 years, which would be much better tax-wise than taking it all in one year.

I actually tried this approach first and they refused. Their policy specifically states that the repayment must be for the gross amount regardless of tax withholding. They said it was because they reported the full amount to the IRS as compensation and can't change that reporting after the fact. Did your company provide any specific reasoning for why they were willing to accept just the net amount?

Their reasoning was that the purpose of the repayment policy was to recover the actual benefit I received, not to profit from the situation. They consulted with their tax department who confirmed they could handle it properly on their end by adjusting their records to show I had repaid the benefit. The key was speaking with someone in their benefits department who had dealt with this before, rather than just HR. They acknowledged it was a common issue and they had an established process for handling net repayments rather than gross. Maybe try escalating to someone in the benefits or compensation department who might have more flexibility?

This is brilliant advice! I never thought about negotiating this with a new employer. Did you have to provide documentation of the repayment amount to your new company? And did they treat the extra signing bonus as taxable income?