This is exactly what I'm worried about. How detailed does the documentation need to be for proving the revenue decline was COVID-related? We definitely had a 32% drop, but how do I PROVE it was because of COVID vs other market factors? We're in manufacturing and there were supply chain issues, reduced orders, etc.

For proving COVID causation, you'll want to create a narrative document that connects specific COVID factors to your business decline. Include things like: emails from customers canceling or reducing orders citing COVID concerns, documentation of supply chain disruptions with vendor communications, any relevant COVID restrictions that affected your operations, contemporaneous business records showing canceled projects or reduced capacity. The key is showing a clear cause-and-effect relationship. Also maintain detailed quarterly revenue reports that clearly show the percentage decline from 2019 to 2021 for the same quarters. The more specific documentation you have linking COVID factors directly to your revenue decline, the stronger your position will be if audited.

My brother's construction business got audited for their ERC claim last month. They claimed about $135k total. The auditor mainly focused on two things: documentation of their revenue decline and making sure they didn't count wages that were paid with PPP funds. They had good records and passed, but the agent mentioned they're specifically targeting claims filed by third-party "ERC specialists" since they've found a lot of fraud there.

I've heard about 1031 exchanges but wasn't sure if they applied to properties you build yourself. Do you know if there are any special rules for self-built investment properties? And do I need to identify the replacement property before I sell?

1031 exchanges absolutely can work for self-built investment properties. The fact that you built it yourself doesn't matter for exchange purposes - what matters is that it was held as an investment property. Yes, you must identify potential replacement properties within 45 days of selling your property, and you must close on one of those identified properties within 180 days. This is absolutely strict - miss those deadlines by even one day and the entire exchange fails. Also critical: you cannot touch the proceeds from your sale - they must go directly to a qualified intermediary who will hold them until you're ready to purchase the replacement property.

That's not how QBI works for real estate. You'd need to be classified as a real estate professional and spend 750+ hours annually in real estate activities. A one-off project like this wouldn't qualify unless OP is regularly in the business of building and selling properties.

I didn't even think about the state implications! Do you know if the IRS automatically notifies state tax authorities when they find federal tax discrepancies?

States and the IRS do share information, but it's not always automatic or immediate. Some states have information-sharing agreements with the IRS, but the timing varies widely. In my experience, if the federal issue involved income that should have been reported on your state return too (like unreported 1099 income), you should probably expect the state to catch up eventually. It's usually better to be proactive and amend your state returns if needed. This often looks better than waiting for them to find it, and you might face fewer penalties for voluntarily correcting the issue.

I've helped clients with OICs, and they're definitely harder to get approved than regular payment plans. The IRS will only accept if they genuinely believe you cannot pay the full amount through any reasonable means. They look at your assets, income, expenses, and ability to pay. The process requires detailed financial documentation and can take 6+ months for a decision. The approval rate is only around 30-40%. Most people who think they qualify actually don't. Payment plans are approved much more easily and quickly. If you're considering an OIC, I'd recommend consulting with a tax professional first to assess your chances.

That's a great point I hadn't considered. The property is just the first part of a larger inheritance that will come in phases. Would the estate planner work alongside the CPA and attorney, or would they typically handle different aspects of the situation?

Estate planners often work collaboratively with your CPA and attorney. They typically focus on the big picture and long-term strategy while the attorney handles immediate legal matters and the CPA addresses current tax implications. For a phased inheritance situation like yours, an estate planner would be particularly valuable. They can develop a comprehensive strategy that takes into account both current and future assets, helping you avoid potential pitfalls specific to non-citizens. For example, they might suggest specific trust structures that work better for non-citizens or strategies to minimize estate tax exposure across multiple countries.

DO NOT use regular tax software for international inheritance! I tried that last year and it was a disaster. The software doesn't ask the right questions about foreign assets and doesn't include all the necessary forms. I ended up having to amend my return and pay penalties because I missed filing several required information returns.

Thanks for mentioning this! I told my mom right away and she checked her online account with the IRS. Her return was processed correctly with me as her dependent, which makes this even more confusing. Seems like different IRS systems aren't talking to each other properly.

That's definitely the issue then - the system that processes tax returns correctly marked you as a dependent, but the system that distributes stimulus payments didn't get that information. Classic government tech problems! Based on everything I've seen in similar cases, you're very likely in the "safe harbor" category where you can keep the payment without worry.

I'm so sorry about your daughter. Yes, deceased person payments are one of the few cases where the IRS explicitly tells you to return the money. For dependent status confusion like OP's situation, they've been much more lenient. I think they realized the administrative cost of processing returns would exceed the benefits.