One thing that might help clarify the tax implications for your son: he'll need Form 1099-B from his broker showing the sale proceeds, but the broker won't have the correct cost basis since they didn't know your original purchase price. Your son will need to report the correct basis (your original cost) on Form 8949 and Schedule D. This is a common source of confusion because the 1099-B might show the basis as the gift date value or even blank, but for tax purposes, your son must use your original purchase price as his basis. Make sure he has documentation of your original cost basis and purchase date - he'll need both to file correctly. The IRS computers will match the sale proceeds from the 1099-B, so it's crucial that he reports the transaction properly to avoid any automated notices. Also, since you mentioned the stock price didn't change between gift and sale, this makes the documentation easier since there's no question about the fair market value at the time of transfer.

Just to add to all the great information here - I went through a very similar situation with my daughter last year. One thing I learned that might be helpful: make sure to keep detailed records of the exact dates involved, especially if the stock price was volatile around the gift transfer date. Even though you mentioned the price didn't change between gift and sale, the IRS will want to see documentation of the fair market value on the actual gift date for their records. I used the closing price on the date of transfer and kept a screenshot of the stock quote from that day. Also, since your son immediately put the proceeds into CDs, that's actually a smart move tax-wise. The capital gains tax will be due on his return for this year, but the CD interest going forward will be taxed as ordinary income in future years when the CDs mature. Just something to keep in mind for his future tax planning. The good news is that since you stayed under the annual gift tax exclusion, this is a pretty straightforward transaction from a documentation standpoint. Your son just needs your original purchase price and date, plus proof of the gift transfer.

This has been an incredibly helpful thread to read through! As someone who's relatively new to the LLC world, I really appreciate how everyone has broken down the different ways to verify your tax election status. The consensus seems crystal clear: if you've been filing Schedule C with your personal tax return, that's definitive proof your LLC is operating as a disregarded entity (the default status). Form 8832 is specifically for making an active election to CHANGE from this default to corporate treatment - it's not something that happens automatically or by accident. What really stands out to me is how many different verification methods have been shared: - Checking your tax return filing history (Schedule C vs. corporate returns) - Contacting LegalZoom or whoever set up your LLC - Reviewing any IRS correspondence you've received - Looking at your business bank account setup documentation - Checking your accounting software tax settings - Reviewing quarterly estimated payment methods The fact that ALL of these different approaches point to the same conclusion for your situation gives me confidence that the advice here is spot-on. You're definitely Category 2, and your client should issue the 1099 using your personal name and SSN. I also appreciate everyone emphasizing that the disregarded entity status is actually the SIMPLER path for most single-member LLC owners. It's reassuring to know that if you haven't actively elected corporate treatment, you're not missing out on anything - you're just taking the straightforward default route that keeps your tax filing simple with Schedule C. Thanks to everyone for sharing their experiences and creating such a comprehensive resource for other LLC owners facing this same confusion!

As a newcomer to this community and someone who's been helping small business owners with similar tax questions, I want to echo what everyone has said - you're definitely Category 2! The evidence is overwhelming: filing Schedule C with your personal return is the clearest possible indicator that your LLC is operating as a disregarded entity (the default status). If you had filed Form 8832 to elect corporate treatment, you would have been required to file separate corporate tax returns (Form 1120 or 1120S), not Schedule C. I particularly appreciate how this thread has shown multiple verification approaches all pointing to the same conclusion. The fact that you don't recall receiving an IRS acceptance letter for Form 8832 is also significant - the IRS always sends confirmation when tax elections are processed, and it's not something you'd easily forget since it represents a major change in how your business is taxed. For your client response, you can confidently say Category 2 and make sure they know to issue the 1099-NEC using your full legal name and SSN (not your LLC name and EIN). This is crucial for proper tax matching when you file your Schedule C. While calling LegalZoom for final confirmation is smart for peace of mind, you already have all the evidence you need. The default disregarded entity treatment is actually simpler for most single-member LLC owners - no separate corporate returns, just straightforward Schedule C reporting like you've been successfully doing. You're in great shape!

Has anyone had success getting their employer to change their mind about this kind of policy? My company just announced the same thing for this year's W-2s and several of us want to push back.

I work in tax preparation and see this situation a lot. Your employer is within their rights to refuse in-person pickup - they only need to provide W-2s by January 31st through any reasonable method. However, here's a practical tip that might help: call your HR department and explain that you have time-sensitive financial needs (like your March expenses). Sometimes being specific about why you need it faster can make them more accommodating. Some companies will at least tell you the exact mail date so you know when to expect it. Also, if your company uses a payroll service like ADP, Paychex, or others, you might be able to access your W-2 online even if your employer hasn't set up a portal. Try creating an account directly with whatever service processes your paychecks - many employees don't realize this is an option. Worst case scenario, most mail within the same city/region takes 1-3 business days, so if they mail by January 31st, you'd likely have it by February 3rd at the latest. Not ideal, but not as bad as the 1-2 weeks you're worried about.

The answers here are helpful but don't forget there's a difference between having to file and actually owing tax. A lot of states require filing even if you don't end up owing anything. Or they might have minimum tax amounts even with losses.

This is such a timely discussion - I'm dealing with a similar multi-state nexus nightmare right now. One thing I'd add is to make sure you're also considering franchise tax obligations, not just corporate income tax. Some states like Delaware and Texas have franchise taxes that can apply even when you don't have income tax nexus. Also, for anyone using remote workers, keep detailed records of where they're actually performing work versus where they're "based." I learned the hard way that some states care more about where the work is physically performed than where the employee officially resides. Our tax advisor said this documentation could be crucial if we ever get audited on our nexus determinations. The economic nexus thresholds are changing so frequently that whatever resource you use, make sure it's updated at least quarterly. I've seen states lower their thresholds mid-year without much fanfare.

I went through this exact same situation two years ago and it was incredibly frustrating! The key thing to remember is that Box 4 adjustments are usually timing corrections, not actual changes to what you paid. Here's what I learned from my experience: Keep detailed records of all your actual payments (bank statements, receipts, etc.) and compare them to what the 1098-T shows. This will help you verify whether the university's reporting is accurate. One thing that helped me was requesting a "student account ledger" from my university's student accounts office (not financial aid). This shows every single transaction on your account with exact dates, which makes it much easier to understand how payments were allocated between tax years. Also, don't stress too much about the amended return possibility. Like others have mentioned, if you had substantial qualified expenses last year beyond what's being adjusted in Box 4, your AOTC likely won't change and you won't need to amend. The most important thing is to use the correct calculation for this year: Box 1 minus Box 4 minus any tax-free assistance (Box 5) equals your qualified expenses for AOTC purposes this year.

I've been through this exact headache with Box 4 adjustments! What really helped me was understanding that universities often have different fiscal years than the calendar year we use for taxes, which creates these timing mismatches. One thing I'd suggest is calling your university's bursar's office (student accounts) rather than financial aid. They handle the actual billing and payment processing, so they're usually better equipped to explain the Box 4 adjustments. Financial aid deals more with scholarships and grants. When I had my Box 4 situation, it turned out my university had received a payment in late December but didn't process it until January, then later realized it should have been counted in the previous tax year. The $18,000 adjustment you're seeing could be something similar. For your taxes, the math is straightforward: your actual qualified expenses for THIS year = Box 1 ($35,000) minus Box 4 ($18,000) = $17,000. Then subtract any scholarships/grants from Box 5 to get your net qualified expenses for the AOTC. Don't panic about amending last year's return unless the adjustment would actually change your tax liability. If you had plenty of qualified expenses beyond the $4,000 AOTC threshold last year, you're probably fine.