But what about Section 336(e)? Doesn't that election let you treat the liquidation differently for basis purposes? I thought that gave corporations some flexibility in how assets are valued during liquidation.

Good question about 336(e). That election is different - it applies to certain stock dispositions, not to the liquidation itself. A 336(e) election can apply when a corporation sells stock of a subsidiary, and it essentially treats the transaction as an asset sale rather than a stock sale. But in a straight 332 liquidation where the parent is receiving assets directly from its subsidiary, 334(b)(1) controls and mandates carryover basis. The flexibility you're thinking about might relate to planning opportunities before the liquidation, but not to the basis determination once you're in a qualifying 332 liquidation.

Totally agree. My company did a subsidiary liquidation last year and we got caught by the built-in loss limitations we didn't know about. Cost us a fortune. Would have been worth paying a specialist!

Yes! This happened to me too. They coded mine as a "7" (I'm over 59.5) even though it was definitely a rollover. My tax guy said the important thing is to mark it as a rollover when entering it into tax software. He said the IRS reconciles this with the 5498 form your receiving institution files showing the money went into another IRA.

Thanks for confirming! That makes me feel better. I didn't realize the receiving institution files a Form 5498 that the IRS can match to my rollover. That makes sense that there would be a paper trail on both ends. I've been keeping all my documentation just in case, but it's good to know there's an additional safeguard in the system.

Oof, that's a really good point. I had the same issue with a 401k rollover (not an IRA). Had to scramble to find extra cash to make up the withheld amount. Then had to wait for the tax refund the following year to get that withheld money back.

The key difference is that OP was a 50% owner for the ENTIRE year in question. It's not about current ownership - it's about who had ownership during the tax period being filed. The business operations during that year were under both partners, so both should have input on how those operations are reported to the IRS.

Wouldn't filing an 8082 potentially trigger an audit though? I've always heard this form raises red flags with the IRS.

Filing Form 8082 doesn't automatically trigger an audit, but it does increase the chances of your return getting a closer look. However, that increased scrutiny is often limited to the specific items you've reported inconsistently, not your entire return. The important thing is to have solid documentation supporting your position. If you're right on the merits and can back up your treatment with records and tax law, an audit shouldn't be a major concern. Many tax professionals consider it better to file an 8082 than to report income or deductions incorrectly just to match an improper K-1. The penalty for failing to file an 8082 when required can be substantial ($50 per inconsistency), plus any additional penalties if the inconsistency results in understating your tax.

I'm having this exact issue! Filed as Married Filing Jointly last year but now I'm divorced and filing as Single. Getting rejected with IND-031-04. Did changing the filing status alone fix your problem or was there something specific your preparer had to do?

The filing status change itself wasn't actually the problem - it was how the AGI was being validated. When your filing status changes, you still need to use the exact AGI from your previous return, but the system sometimes gets confused about how to match your identity with the different status. My preparer had the IRS verify my identity using additional information beyond just the AGI - they confirmed my date of birth, address, and the last 8 digits of my previous year's return. After they manually verified me in their system, I was able to e-file without issues. The rep also mentioned that entering $0 as the prior year AGI sometimes works as a bypass when there are filing status changes, but that wasn't successful in my case.

This is actually really smart. I didn't even think to check my IRS online account. Where exactly in the account can you find your official AGI? I'm logging in now but there's so many different sections.

Look for the "Tax Records" section after you log in. Then select "Transcripts" and request a "Return Transcript" for 2021. The AGI will be clearly labeled on that transcript. If you don't see it right away, search for "Adjusted Gross Income" on the page or look for line 11 from Form 1040. Sometimes the IRS makes small adjustments to returns after processing them, which can create differences between what your tax software shows and what the IRS has on record. These adjustments might be for math corrections, misapplied payments, or other technical reasons. The transcript shows exactly what's in their system, which is what the validation is checking against.

Is the process any different if the form was actually incomplete rather than just lost? The back of OP's notice mentions incorrect information. My situation is similar but I'm pretty sure I messed up a section of my foreign trust reporting.

For incomplete forms, the process is more complicated. The IRS is much less forgiving about errors than they are about delivery issues. If you knowingly submitted an incomplete form, you'll have a harder time proving reasonable cause. Your best option would be to immediately file a complete and correct form, then request abatement based on making a good faith attempt to comply, especially if this is your first time dealing with this form. Emphasize any complexity or confusion in the instructions that led to the error. If you relied on professional advice that resulted in the incomplete filing, that can also support reasonable cause.

I made this exact mistake - didn't request a collection hold. Even with my abatement request under review, they sent me to collections and I had to deal with a whole separate department. Definitely make sure they formally pause collections while this is being sorted out!