Did they convert all your foreign currency amounts or did you have to do that yourself? And did you get asked for any kind of proof of the exchange rates you used?

I did the currency conversions myself using yearly average exchange rates from the Treasury Department's website. The auditor didn't ask for proof of the exchange rates I used, but I had included a note in my file explaining which conversion method I was using and why. If you're dealing with significant currency fluctuations, you might want to use monthly average rates instead of yearly, especially if that works in your favor. The key is being consistent and having a reasonable explanation for your method. They didn't scrutinize the actual conversion calculations much - they were more concerned with verifying the base expenses were legitimate.

Thanks for sharing this. So many of us expats are perfectionist rule-followers when it comes to taxes because we're already in such a weird situation filing from abroad. It's reassuring to hear that reasonable approaches are acceptable!

Makes sense in theory, but isn't it a nightmare to track all those tiny staking deposits? I get rewards like every day or week depending on the platform. How do you possibly keep track of the cost basis for each one?

It would be an absolute nightmare to track manually, which is why I use specialized crypto tax software. It connects to your wallets and exchanges through APIs and automatically grabs all transactions, including those tiny daily or weekly staking rewards. Each reward is recorded with its fair market value at the time of receipt, establishing your cost basis. When you sell, the software can use methods like FIFO (First In, First Out) or specific identification to determine which batch of crypto you're selling and calculate the appropriate gain or loss. Worth every penny come tax season.

Yes, the same general principles apply. When you receive rewards in a different token, you'll be taxed on the fair market value of the rewards token at the time you receive it. This creates your cost basis for the rewards token. If you later sell that rewards token, you'll pay capital gains tax on any appreciation since you received it. The original staked ETH isn't directly part of this tax calculation (though of course it has its own separate cost basis and potential capital gains when you eventually unstake and sell it).

Is there a specific format you recommend for this viewing log? Should it be detailed or just basic info like date, title, and purpose? I'm trying to get better about documentation but don't want to overcomplicate things.

Nothing fancy needed! A simple spreadsheet or even a note on your phone works well. Include: 1) Date watched, 2) Title, 3) Platform (Netflix, theater, etc.), 4) Brief purpose (e.g., "Studied accent work for upcoming role" or "Researched period movement for 1920s play"), and 5) Approximate time spent. This doesn't need to be elaborate - just enough to show the IRS that you're tracking business versus personal use. Most of my professional actor friends spend about 5-10 minutes per week updating their viewing logs. The key is consistency rather than extensive detail.

Were there any red flags that triggered your audit? I'm curious if it was the streaming services specifically or something else in your return that caught their attention.

Oh man, I hadn't even thought about state taxes! Do you know what states besides California don't follow the federal QSBS rules? I'm in Pennsylvania if that makes any difference.

Pennsylvania actually does follow the federal QSBS rules, so you should be good on both state and federal taxes if you qualify. States that don't fully conform to federal QSBS rules include California, Alabama, Mississippi, New Jersey, and a few others. Some states partially conform, meaning they might offer a reduced exclusion percentage or have additional state-specific requirements. It's definitely worth checking with a tax professional familiar with your state's specific rules since this can make a huge difference in your total tax bill.

I tried doing this in TurboTax last year and it was super confusing. They do have a section for it but you have to know exactly where to look - it's under investment income, then capital gains, then there's a checkbox about "special conditions" where you can select Section 1202 stock. But honestly, it was really hard to tell if I was doing it right. I ended up hiring a CPA just to be safe since it was a big amount of money.

Does the size of the portable building matter? I'm looking at something smaller (8x12) for my business. Would that have a better chance of qualifying for Section 179 since it's obviously more "portable" than larger structures?

Size can certainly help strengthen your case. An 8x12 structure is clearly more portable than larger buildings, making it easier to argue it's personal property rather than a real estate improvement. Smaller buildings are also more likely to be sold in the marketplace as movable units rather than permanent structures. However, the fundamental criteria remain the same regardless of size - lack of permanent foundation, designed to be relocated, not permanently affixed to land, etc. Even large portable buildings can qualify if they meet these criteria. The key is always proper documentation of the portable nature and 100% business use.

Did you have to file any special forms beyond the regular Section 179 form? And did you classify it as "furniture and equipment" or something else in your tax software?

No special forms were needed beyond Form 4562 (Depreciation and Amortization) where you claim Section 179 deductions. I listed it as "Portable Workshop Structure" in the property description. In terms of classification, my accountant put it under "Machinery and Equipment" rather than anything related to real estate or buildings. She said this classification further reinforces that it's personal property eligible for Section 179 rather than a building improvement that would need to be depreciated over a longer period.