Good point! I just double-checked my statements and there was actually a small cash payment of $37.42 for a fractional share. But the CP2000 is claiming I owe taxes on the entire value of all converted shares, not just this tiny cash amount. Could this small cash payout be why the entire transaction got flagged?

Yes, that's exactly what probably happened! The cash-in-lieu payment triggered a report to the IRS, but then the entire transaction got mischaracterized. This is super common. Your response to the CP2000 should acknowledge this small taxable amount (the $37.42) but explain that the remainder of the transaction was a tax-free reorganization. Include your Morgan Stanley statements showing both the share conversion and the small cash payment. The IRS should adjust their proposed assessment to only tax the cash portion, which would be a much smaller amount than what they're currently claiming.

This is such a good point. I went through an acquisition with Exxon back in 2019 and completely lost track of my original basis. Had to pay an accountant $500 to reconstruct everything when I sold some shares last year. Save yourself the headache!

Would this work even if the stock is only worth like $200? Seems like a lot of hassle for the charity for such a small amount. And how do you claim the deduction - is it complicated to do on your taxes?

Yes, it works even for smaller amounts! Many charities are set up to handle stock donations of all sizes. While some very small local organizations might not have the infrastructure, most medium to large charities definitely do. For claiming the deduction, it's straightforward if you itemize deductions on Schedule A. You'll get a receipt from the charity showing the donation value (usually the market value on the transfer date). If the stock is worth more than $500, you'll also need to fill out Form 8283, but the form isn't particularly complicated. For very small donations, make sure the tax benefit of itemizing would exceed the standard deduction, otherwise there's no additional tax advantage.

Did you have to pay any fees to sell through Computershare? I heard some transfer agents charge like $25-50 for selling shares which seems ridiculous if the stock isn't worth much.

Omg you're right! I just double-checked my transcript and it's actually a 769 code, not 849. I totally misread it. Now I'm even more confused what that means. Is that better or worse than what I thought?

A 769 code typically indicates an earned income credit (EIC) claim on your return. This is just informational and shows the IRS has processed that part of your return. It's neither better nor worse than what you thought - it's just tracking different aspects of your return processing. What you should be looking for is either a 570 code (which would indicate a temporary hold) or an 846 code (which means your refund has been approved and issued). The 769 by itself just acknowledges your EIC claim was received and being processed. If you don't see a 570, that's actually good news - it means there's no specific hold on your account.

Tax Advocate Service is only accepting cases with real hardships now - like you're about to be evicted or have utilities shut off. They won't help with just checking refund status. They're super backlogged and turned me away when I called last week about my delayed refund.

That's really helpful! Do you know if I can have both a Solo 401k and a SEP IRA for the same business? And does the contribution limit apply across both plans or separately?

You can have both types of plans, but the contribution limits overlap - they're not separate. The total combined employer contributions across all defined contribution plans (401k, SEP IRA, etc.) can't exceed the annual limit ($61,000 for 2022 or $67,500 if you're eligible for catch-up contributions). If you've already made employer contributions to your Solo 401k for 2022, you'd need to subtract those from the maximum SEP IRA contribution you could make. It gets complicated quickly, which is why having a tax pro run the numbers is usually worth it. The key advantage is that you can still set up and fund a SEP IRA now for 2022, whereas the Solo 401k needed to be established by Dec 31, 2022.

I did this last year. C-corps have some advantages for retirement planning (like the ability to create defined benefit plans with much higher contribution limits), but the tax situation gets WAY more complicated. You're looking at potential double taxation issues that can offset the retirement benefits.

That's an interesting approach I hadn't considered! About how much do you typically underwithhold? And do you just make equal quarterly payments, or is there some calculation involved? I'm intrigued by the idea of having more control over our money throughout the year.

We typically underwithhold by about 15% of our total expected tax liability. For someone in your situation, that might mean underwithholding by around $30,000 total for the year, or $2,500 monthly that stays in your accounts instead of going to the IRS. The quarterly payments don't have to be equal if your income fluctuates, but we keep it simple and just divide our expected shortfall by 4. The payment due dates are April 15, June 15, September 15, and January 15 of the following year. You can make them online at the IRS website using Direct Pay or EFTPS. Just make sure you're meeting that safe harbor of 110% of your previous year's tax liability (since you're over the $150k AGI threshold). That's the easiest way to guarantee no penalties regardless of this year's actual liability.

I use it all the time and find it really accurate, but it's crucial that you include ALL income sources, not just your W-2 jobs. Make sure you're entering things like investment income, rental properties, etc. The other key is to update it quarterly since your situation might change throughout the year.