This is incorrect information. Property taxes cannot be added to your basis for inherited property. They're either deductible in the year paid (if you itemize) or not deductible at all. Only capital improvements can be added to basis.

Can you explain the stock basis part again? I thought the issue was the difference between original purchase price of the asset and current FMV? How does stock basis factor in?

So there are actually two separate tax events happening in a liquidation: First, the corporation is treated as selling its assets to you at FMV. Since the expensed items have $0 basis to the corporation, the entire FMV is gain that flows through to you as the S-Corp shareholder. Second, you're surrendering your stock in exchange for these assets. You recognize gain/loss based on the difference between the FMV of assets received and your stock basis. Your stock basis includes your original investment plus all income that's flowed through to you minus distributions over the years. If your stock basis is high enough (from retained earnings for example), it can offset the asset distribution value, potentially resulting in no additional gain at the shareholder level.

I did this last year. My accountant had me focus only on items that still had meaningful value and could be sold on the secondary market. We didn't bother with office supplies, furniture under $200, etc. We documented everything with photos and current marketplace listings for comparable items. For really small stuff, we did group some items together as "office equipment" with a reasonable bulk value. The IRS isn't going to audit you over a $30 stapler, but they might care about that $2,000 computer or specialized equipment.

Omg that's terrifying! Did she try getting help from the Taxpayer Advocate Service? I've heard they can sometimes intervene in these penalty situations especially if there was genuine confusion about the requirements.

She did contact the Taxpayer Advocate Service, and they were helpful in getting the IRS to actually review her reasonable cause argument. The process is still ongoing, but they've at least gotten the collection activities paused while they review her case. The TAS representative explained that the IRS considers several factors for reasonable cause: whether she tried to learn about filing requirements, if there was a history of compliance with other tax obligations, and if this was her first time dealing with international tax issues. Having documentation of her efforts to understand the requirements has been crucial to her case.

Thank you for bringing this up. The property isn't currently being rented out, but I might want to do that in the future. Is there a good resource you found that explains all these different forms? I feel like I'm discovering new requirements every day.

The IRS has a decent publication called "U.S. Citizens and Resident Aliens Abroad" (Publication 54) that covers many of these requirements. There's also a specific section on their website about international taxpayers that lists the various forms. I found the most comprehensive help came from a tax attorney who specializes in international taxation. It was expensive, but worth it for the initial setup year. Once I understood all the requirements, I was able to handle most of it myself in subsequent years using tax software that supports international situations. Just be aware that not all tax software handles these specialized international forms well - you might need to use one of the more comprehensive packages.

Thanks for sharing your experience! That's encouraging to hear it went smoothly for you. Did your attorney try to argue that he was entitled to credit for teaching you the process or anything like that? I'm worried mine might try to claim I'm only able to do it myself because of his "expertise" he shared over the years.

Not at all! The agreement was for his services on a per-appeal basis, not for "teaching" me anything. It's like hiring a plumber - they don't get to claim a percentage of all future savings on your water bill just because you watched them fix your pipes. Property tax appeals are a standard process that anyone can learn. The forms and procedures are publicly available, and what constitutes a valid comparable property isn't some proprietary secret. Your attorney doesn't own the concept of property tax appeals. Just make sure you're not in the middle of an active appeal when you end things. Complete the current cycle, pay what you owe under your agreement, then notify him before the next cycle begins that you'll be handling it yourself going forward.

I used PropertyTaxLowerer.com last year and it was pretty good. Not free but WAY cheaper than giving up 50% to an attorney. They helped identify comps and filled out all the paperwork. I just had to sign and mail it.

This is so important! My company had me set as "Single" for my first 3 paychecks despite me telling HR I was married with kids. When they finally fixed it, the difference was huge. OP should definitely double check this!

Absolutely right! The difference between "Single" and "Married Filing Jointly" withholding can be substantial. In my case, it was almost a 15% difference in take-home pay. I'd also recommend looking at the actual pay stub carefully. Sometimes there are other deductions beyond just taxes - health insurance, retirement contributions, or other benefits that might be reducing the take-home amount. These can be especially confusing when you're new to the US system since benefit packages work differently than in many other countries.

That tool is super confusing for non-citizens though. It doesn't account for visa status at all and some of the questions don't even apply to people who just moved to the US. I tried using it last year and ended up more confused.

That's a fair point. The tool does assume a lot of prior knowledge about the US tax system that newcomers wouldn't have. I found I had to research several terms before I could even answer the basic questions. When I used it, I had already been in the US for about a year, so I had some understanding of how things worked. For someone completely new to the system, you're right that it might create more confusion than clarity.