The charitable remainder trust is interesting but wouldn't work in my case since I don't own the asset - it's just a profit share agreement that pays out when the company sells. Could opportunity zone investments still work after I receive the payout? How quickly would I need to invest in one after getting the profit share payment?

You're right about the CRT - it only works for assets you currently own, not future payments you'll receive. Sorry I missed that detail. For opportunity zone investments, you generally have 180 days from realizing the capital gain to reinvest into a qualified opportunity fund. So you could potentially use this strategy after receiving your profit share payout. The deferral benefits aren't as strong as they were initially, but you can still defer the tax until 2026 and potentially reduce your taxable gain by 10% if you hold the investment long enough.

Installment sales are complicated though right? I tried to do one last year and my tax software couldn't handle it - ended up needing to pay an accountant extra to file correctly.

Doesn't that mean you have to pay for the tax software twice? Once for the estimate and once for actually filing?

No, you don't have to pay twice. With most tax software, you only pay when you actually file. You can go through the entire process, see your refund amount, and then just save your progress. When you're ready to file for real, you just pick up where you left off and submit. Some software even lets you create multiple scenarios without charging you. I've done this with TurboTax where I tried different filing statuses to see which gave a better refund before deciding which one to actually use.

Free File is great in theory but sometimes those "free" options hit you with fees at the last minute for state filing or certain forms.

Thank you for this practical advice. I've been saving receipts but I hadn't thought about organizing them by category or keeping screenshots of the campaign itself. Did your dad's accountant recommend any specific way to document that the expenses were paid specifically from the crowdfunding money versus regular income? Should I have set up a separate bank account just for these funds?

My dad actually didn't set up a separate account, and his accountant said that was his biggest mistake. She strongly recommended having a dedicated account for crowdfunding money to create a clear paper trail. It doesn't have to be anything fancy - even just a free checking account where you deposit all the crowdfunding money. That way, if you're ever audited, you can clearly show the money coming in from crowdfunding and then going out for qualified expenses. Without that separation, it gets really muddy trying to prove which dollars went to which expenses. If possible, I'd recommend transferring the funds to a separate account now and using that for all remaining expenses.

I wasn't audited for crowdfunding specifically, but I did get flagged for an audit the same year I received about $35k from a GiveForward campaign (similar to GoFundMe) for my son's medical treatment. When I showed the IRS agent my documentation proving it was a medical crowdfunding campaign, they immediately marked that portion as non-taxable and moved on to examining my other income. They didn't question it at all once they saw what it was.

Does anyone know if the BSO portal can handle 1099-MISC forms too? I have a mix of NEC and MISC forms I need to file.

The BSO portal primarily supports 1099-NEC forms, which is what most small businesses need for contractor payments. For 1099-MISC forms, you'll still need to use the IRS FIRE system or one of the approved e-filing services. The reason for this split is because in 2020, the IRS moved non-employee compensation reporting from the 1099-MISC to the new 1099-NEC form. Other types of miscellaneous income (like rent, prizes, etc.) still go on the 1099-MISC. So if you're specifically paying independent contractors, you should be using the 1099-NEC which works with the BSO portal.

I heard the IRS sometimes waives penalties for first-time mistakes if you call and explain the situation. Has anyone had luck with this? I'm also running behind this year.

Thank you for these clear steps! Quick question - if my shares were sold at slightly different prices throughout the day (not all exactly at the FMV at exercise), does that change how I should calculate the adjustment?

No problem! If your shares were sold at slightly different prices throughout the day, that doesn't change how you calculate the basis adjustment. The adjustment is still (FMV at exercise - original option price) × number of shares sold. The selling prices will determine if you have any additional short-term capital gain or loss after the adjustment. For example, if FMV at exercise was $106.63, but some shares sold for $106.80 and others for $106.40, you'd have a small gain on some and small loss on others. But the basis adjustment calculation is the same regardless of the actual sale prices.

Yes, you'll absolutely need to make the same type of adjustment when you eventually sell. The key is that when you exercised the options, you already paid ordinary income tax on the spread between your grant price and the FMV on exercise date. That spread was included in your W-2 income for the year you exercised. Your new cost basis becomes the FMV on the date you exercised, not the original grant price. When your broker issues a 1099-B after you sell, they'll likely show the original grant price as your basis, so you'll need to make that same Form 8949 adjustment to avoid being taxed twice on the same income. Keep good records of your exercise date and the FMV on that date!