Thanks for sharing your experience! Did you face any issues with the timing of revoking your S election? I've heard there might be optimal times during the fiscal year to make the switch. Also, did you experience any unexpected costs during the conversion process that I should budget for?

Timing definitely matters. We revoked our S election mid-year which created some accounting complexity with a partial-year S-Corp return and partial-year C-Corp return. In retrospect, doing it at year-end would have been cleaner. As for unexpected costs, the biggest ones were accounting fees for handling the more complex tax filings and legal fees for updating our shareholder agreements. Our accountant charged about $2,800 for the additional work, and legal fees were around $4,000. We also needed to update our capitalization table and stock certificates, which wasn't expensive but took more time than expected. Budget at least $7-8K for a smooth transition.

In theory, you could create a two-entity structure - an S-Corp for operations that pays management fees to a C-Corp holding company where investors put their money. But honestly, it's overly complicated and most serious VCs will run away from this setup. The legal and accounting overhead usually erases any tax benefits. We tried something similar and abandoned it after our Series A investors balked at the complexity.

Does your employer know you do this? I'm worried mine would think I'm violating some non-compete if I tell them I need extra withholding for my side business.

Your employer doesn't need to know why you're adjusting your withholding. When you fill out a new W-4, you can either claim fewer allowances or simply specify an additional dollar amount to withhold from each paycheck. There's no requirement to explain why you want more taxes withheld. Many people adjust their withholding for various reasons - maybe they have investment income, rental property, or just want a bigger refund. The payroll department processes the change without needing an explanation.

Where do you find the estimator? I've been all over the IRS site and can't find anything helpful.

5 Do you know if there are any exemptions for inherited property at the state level? I'm dealing with a similar situation but in Washington state, and I've heard rumors about special provisions for family transfers.

17 State exemptions vary widely. Washington has an estate tax with exemptions for certain family transfers, but it's separate from capital gains considerations. Some states offer partial exemptions for inherited family farms or primary residences. The best approach is to check directly with your state's revenue department. Each state has different thresholds, rates, and exemptions. These rules change frequently too, so make sure you're looking at current information for the tax year when you'll sell.

12 My family did this with my grandma's farm property. We sold it in three separate transactions over three tax years. It helped keep us in lower capital gains brackets each year rather than one massive hit. You need to be careful though - there are rules about "related party transactions" and "installment sales" that might apply. We had to structure each sale as truly separate (different parcels to different buyers) to avoid IRS scrutiny.

That's a really good point! Should I also get a copy of his tax return showing he included the income? Or is that too much to ask?

Getting a copy of his tax return would be ideal, but many people aren't comfortable sharing their full tax returns. At minimum, I'd ask for a signed statement that acknowledges the specific dollar amount from the 1099-K and confirms he included it on his Schedule C or business return. If he's willing to provide a redacted copy of his Schedule C showing the income line that includes these sales, that would be even better. The more documentation you have showing this was handled properly and wasn't an attempt to evade taxes, the better positioned you'll be if there are ever questions.

Did the IRS ever contact you about the mismatch between the 1099-K with your SSN and your tax return before you filed the nominee forms?

I haven't been getting pay stubs! That's part of the problem - they just direct deposit the money and when I've asked for stubs they say "we'll email them" but never do. Is that even legal? How do I know if they're actually sending the money to the IRS if I don't get pay stubs?

That's concerning. Employers are legally required to provide either electronic or paper pay statements in most states. If they're not providing pay stubs, that's another red flag pointing to potential financial issues at the company. You can check if they're remitting your taxes by creating an account on the IRS website and viewing your wage and income transcript. It won't show real-time data, but you'll eventually be able to see if they're reporting your withholding properly. This is definitely a situation to stay on top of because if they're having financial troubles, tax withholding is often one of the first things struggling businesses stop remitting properly.

The IRS withholding calculator is definitely helpful but I found it confusing at first. Did you end up withholding enough to cover what you would owe? I tried using it but wasn't sure if I did it right.