Just as a data point, I started a side business last year and purchased about $15k in equipment. Using Section 179, I was able to deduct it all in the first year. Reduced my tax bill by over $3k! Just make sure you keep detailed records of everything you buy (receipts, invoices, etc.) and document how it's used for business purposes. Also worth noting your self-employment tax won't be reduced by these deductions - only your income tax. And if your business doesn't show a profit, you technically don't owe SE tax, but you're also not building Social Security credits.

Great question about the equipment deductions! You're definitely on the right track. As a sole proprietor, your business income and expenses flow through to your personal return via Schedule C, so yes, you can deduct those startup equipment costs. A few key points to keep in mind: 1. **Section 179 Election**: You can likely deduct the full $13.5k in equipment costs in the first year using Section 179, which allows up to $1,160,000 in immediate expensing for 2025. 2. **Business vs. Hobby**: Make sure you can demonstrate this is a legitimate business venture with profit motive. Keep detailed records of your business activities, marketing efforts, and time invested. 3. **Self-Employment Tax**: While equipment deductions reduce your income tax, remember you'll still owe self-employment tax (15.3%) on any net profit from the business. 4. **Withholding Adjustment**: Your idea to reduce W-2 withholding makes sense, but be conservative. Consider using Form 1040-ES to properly calculate estimated taxes rather than just guessing at withholding adjustments. 5. **Documentation**: Keep meticulous records of all equipment purchases, including receipts, invoices, and documentation of business use. Working with a CPA is smart - they can help you navigate the Section 179 vs. depreciation decision and ensure you're maximizing your tax benefits while staying compliant.

One thing I haven't seen mentioned yet is the impact on your Qualified Small Business Stock (QSBS) eligibility if you have any. If your C Corp stock qualifies for QSBS treatment under Section 1202, converting to an LLC will terminate that benefit going forward, and you'll lose the potential for tax-free gains on sale. Also, don't forget about the accumulated earnings and profits (E&P) in your C Corp. When you liquidate, any distribution in excess of your stock basis will be taxed as capital gains. If you have significant retained earnings from profitable years, this could create a substantial tax hit even if your assets haven't appreciated much. I'd strongly recommend running the numbers on both the asset appreciation and the E&P distribution before making the final decision. Sometimes the tax cost of conversion outweighs the administrative benefits, especially if you're planning to sell the business in the next few years anyway.

Great question about preserving QSBS benefits! You're absolutely right to consider this carefully. An S Corp election could be a smart middle ground - you'd keep the corporate structure (and thus preserve QSBS eligibility), eliminate double taxation, but still have more administrative requirements than an LLC. However, there are some important considerations with S Corp elections: you're limited to 100 shareholders who must be US citizens/residents, only one class of stock, and you lose some flexibility in profit/loss allocations. Also, if you have accumulated E&P from your C Corp years, you could face built-in gains tax on asset sales within 5 years of the S election. For QSBS purposes, you'd want to ensure your business activities still qualify (active business, not just passive investments, etc.) and that you continue to meet the gross asset test. If you're genuinely looking at potential millions in tax-free gains under Section 1202, the administrative burden of maintaining corporate status might be worth it compared to losing that massive tax benefit. I'd definitely run projections comparing: 1) Stay C Corp, 2) Elect S Corp status, 3) Convert to LLC. Factor in ongoing compliance costs, tax implications of conversion, and the potential QSBS benefit based on realistic exit scenarios and timeframes.

I went through this exact situation when my stepfather passed in 2021. We received multiple 1099-C forms in 2023 totaling about $5,800, all issued in his name with his SSN for debts that were cancelled well after his death. What really helped me was understanding that the IRS has specific guidance on this - when debt is cancelled after someone dies, it's not considered income to either the deceased person or their estate because, logically, a deceased person can't receive income. The estate also isn't liable for this "income" since the debt cancellation didn't occur during the estate administration. I kept detailed records including copies of all the 1099-C forms, a timeline showing when he passed versus when the debts were cancelled, and a brief explanation referencing IRS Publication 4681. I never had to file anything additional or report these on the estate return. The most important thing is documentation. Even though you don't need to report these, having a clear paper trail showing you were aware of the forms and made an informed decision based on IRS guidance will protect you if there are ever any questions. After three years, I've never received any notices or issues from the IRS about this decision. Your instincts are correct - these 1099-C forms don't create a tax obligation for the estate, especially since it's insolvent. Just keep good records and don't stress about it.

I'm going through this exact situation right now with my father's estate. He passed in 2020 and I just received four 1099-C forms totaling about $6,200, all in his name with his SSN. After reading through all these responses, I feel so much better about handling this correctly. The consensus seems clear - debt cancelled after death isn't taxable income to either the deceased or the estate, especially when the estate is insolvent like in your case. What I'm planning to do is follow the documentation approach several people mentioned: keep copies of all the 1099-C forms, create a simple memo explaining why they're not being reported (referencing IRS Publication 4681), and include a timeline showing dad's death date versus when the debts were actually cancelled. One thing that really helped me understand this was realizing that creditors are required to issue 1099-C forms regardless of the tax implications - they're just following their own reporting requirements. But that doesn't automatically create a tax obligation for us as executors. The advice about not panicking if you get automated IRS notices is also really valuable. Their computer systems might flag the "mismatch" between issued 1099-Cs and no corresponding income reported, but everyone who's dealt with this says it's easily resolved with a simple explanation. Being an executor is overwhelming enough without tax stress. It sounds like you're handling this exactly right by being cautious and seeking advice!

I've been trading options for about a year and ran into this exact same confusion! Your understanding is correct - options with different strike prices OR different expiration dates are generally not considered "substantially identical securities" for wash sale purposes. In your AMZN example, buying calls with a different strike or expiration after selling at a loss should typically not trigger a wash sale. The key is that they need to be identical in ALL aspects (underlying, strike, expiration, call/put) to be substantially identical. That said, I'd recommend keeping detailed records of your trades just in case. Robinhood's wash sale reporting can sometimes be overly conservative and flag trades that aren't actually wash sales according to the IRS rules. I learned this when they incorrectly flagged some of my SPY trades with different expirations. For extra safety, many traders use the "strike ladder" approach - if you want to maintain similar exposure after a loss, buy options with strikes that are $5-10 away from your original position. This makes it crystal clear they're different securities while giving you similar market exposure. The 31-day wait is always the safest approach if you're unsure, but understanding these nuances gives you much more flexibility in your trading strategy!

I've been trading options for about 6 months now and this thread has been incredibly helpful! I was definitely overthinking wash sale rules and being way too conservative with my trades. Just to add another data point - I had a situation last month where I sold TSLA $250 calls at a loss on a Monday, then bought TSLA $255 calls the next day. I was worried this might be a wash sale, but after reading through everyone's experiences here, I'm now confident that the $5 difference in strike price should make them clearly different securities. What really clicked for me is understanding that the "substantially identical" test is quite strict - it's not just about the underlying stock, but the specific contract terms. This gives us a lot more flexibility than I initially thought. I'm also going to implement that spreadsheet tracking system several people mentioned. It sounds like having your own records is essential, both for catching broker errors and for your own peace of mind during tax season. Thanks to everyone who shared their real-world experiences - this has been way more valuable than the generic wash sale advice I found elsewhere!

Thanks everyone for clarifying this! I had no idea about the special attorney reporting rules. I'm definitely going to need to issue that 1099-NEC for my $500 payment then. Quick follow-up question - since I didn't get a W-9 from the attorney upfront (rookie mistake), should I reach out to them now to request it? Or is there a specific deadline I need to meet for getting their tax ID info? I want to make sure I handle this properly and don't miss any important filing deadlines. Also, does anyone know if law firms vs. individual attorneys have different reporting requirements, or is it the same rule regardless?

This thread has been incredibly helpful! I'm a small business owner and had been completely unaware of the special reporting rules for attorney payments. I paid my business lawyer $475 last year for contract review and was planning to skip the 1099-NEC since it was under $600. I'm glad I stumbled across this discussion before filing season gets into full swing. It's frustrating that the rules are different for attorneys compared to other service providers - seems like something that should be more widely known or clearly communicated by the IRS. Does anyone know if there are other professions that have similar special reporting rules with no minimum threshold? I want to make sure I'm not missing any other payments that need 1099s regardless of amount.