So what happens if the checks never get cashed? Do you have to add that back as income in the next year?

If checks never get cashed, it depends on your state's abandoned property laws and how long it's been. For tax purposes, if you determine a check will never be cashed (recipient lost it, company no longer exists, etc.), you should void the check in your accounting system. For the following year, this effectively increases your cash balance. It's not technically "income" - you're just reversing the previous expense. If it's material and from a prior year, you might need to file an amended return, but for small amounts many accountants just adjust it in the current year since Schedule L is informational only for most S-Corps.

Yes, use your QuickBooks cash balance for Line 1. QB is already handling those outstanding checks correctly for cash basis accounting. When you wrote the checks in QB, it reduced your book cash balance immediately, regardless of when they clear the bank. That's why when you reconcile in QB, your starting point is the bank statement balance, and then you check off cleared checks to reach your book balance. Your QB cash balance (the book balance) is the correct amount to report on Line 1.

Does your method work if you have hundreds of different products? I sell a ton of different items on my Etsy shop and this sounds really time-consuming to maintain.

You're right that it gets more complex with hundreds of products. I have about 65 products and it's manageable. For larger inventories, I'd recommend grouping similar products into categories with similar margin profiles. You could also look into inventory management software that integrates with Etsy. I've heard good things about Craftybase and Inventory Planner - both calculate COGS automatically and connect to sales platforms. Might be worth the investment if manual tracking is becoming too burdensome with your product volume.

That formula is correct, but the challenge is figuring out the ending inventory value when you haven't been tracking it throughout the year. You'd need to do a physical count and valuation of everything left, which can be a huge task if you have lots of products!

Do you know if there's any standard way the IRS expects these to be reported? I'm using tax software and it keeps asking for positive numbers and then a separate indication of gain/loss.

The IRS forms themselves typically have separate columns or boxes for gains and losses, so you'd enter positive numbers in either the gain or loss section as appropriate. Most tax software is designed to match this approach, asking you to enter the amount as a positive number and then specify whether it's a gain or loss through a dropdown menu or checkbox. This is actually more foolproof than using negative numbers, as it prevents accidental reversals that could occur if you forgot to include the negative sign.

Your accountant is likely mixing up different types of securities. Section 1256 contracts (which include regulated futures contracts) are generally NOT subject to wash sale rules. This is one of the tax advantages of trading futures versus stocks or options. Since futures are marked-to-market at year end and receive the 60/40 tax treatment, the wash sale restrictions that apply to stocks and securities don't apply. All gains and losses are recognized in the tax year they occur.

What happens if we're in a state without those specific laws? We're in Georgia, and I'm not sure if there are similar requirements here. Should we still set something aside for her?

Georgia doesn't have a specific Coogan Law requirement like California or New York. However, it's still a really good idea to set aside some of your child's earnings in a trust or protected account for their future. Even without legal requirements, many parents choose to save a portion of their child's earnings for college or to give them a financial head start when they reach adulthood. You could set up a 529 college savings plan, a custodial account (UTMA/UGMA), or even a standard savings account in your child's name with you as the custodian. Just be aware that if you're working across state lines or with companies based in Coogan Law states, you might still need to comply with their requirements.

Kiddie tax only applies to unearned income (investments, interest, etc), not to the modeling/acting earnings themselves. If you invest your child's earnings and those investments generate more than $2,300 in income (dividends, interest, capital gains), that's when kiddie tax might kick in. In that case, any unearned income over that threshold would be taxed at the parent's higher tax rate.

Thanks for mentioning this! Yes, it is definitely a legitimate notice - came certified mail, has the official letterhead, and specifically mentions the 90-day period to petition the Tax Court. I wish it was a scam, honestly would be less stressful! Do you think I should go directly to Tax Court, or try to resolve it with the IRS first? The RSU issue seems straightforward once I provide the correct basis info, but the unemployment thing has me worried.

I'd definitely try to resolve it directly with the IRS first. Tax Court should be a last resort, especially since your issues seem correctable with proper documentation. The RSU basis correction is routine, and the IRS generally handles these well once you provide the proper information. For the unemployment issue, treat it as identity theft from the start. File the Identity Theft Affidavit (Form 14039) immediately. Also contact the state unemployment office where the benefits were supposedly paid - they may already have a fraud department investigating similar cases. Getting documentation from them stating you never received benefits will be extremely helpful for your IRS response.

That's such a good point about exact numbers! When I had a similar issue, I rounded on one form and it caused weeks of additional back-and-forth. Also worth noting that the broker's "supplemental information" often has basis details that aren't on the main 1099-B. Check all those extra pages they send!