Would an Offer in Compromise work if I've already set up a state payment plan? Also, does this affect your credit score the same way a payment plan would?

Yes, you can still pursue an Offer in Compromise with the IRS even if you already have a state payment plan in place. The IRS will take your state tax obligations into account when evaluating your offer. In fact, having a state payment plan might strengthen your case by demonstrating your limited ability to pay. Regarding credit scores, an accepted Offer in Compromise can actually be better for your credit in the long run than a payment plan. While the tax lien itself may impact your credit, resolving the debt through an OIC shows resolution. In contrast, a long-term payment plan means you'll have outstanding debt for a much longer period. Just be aware that the OIC process can take 6-12 months, and you'll need to be compliant with all filing and payment requirements during that time.

This is terrible advice. Credit card interest rates are way higher than IRS interest rates. The IRS rate is like 7-8% right now while credit cards are 18-29%. A 401k loan is slightly better but you lose all that potential investment growth.

What about property taxes paid over the years? Do those count as part of the basis? And if she doesn't have receipts for improvements made a long time ago, is there any way to still claim them?

Property taxes paid over the years unfortunately don't increase your basis - they're either deducted as an expense in the year paid (for investment property) or taken as an itemized deduction on Schedule A (for personal property). For improvements without receipts, you're not completely out of luck. You can create a reconstruction of costs using reasonable estimates. Take photos of the improvements, get statements from contractors who did the work if possible, or find comparable costs for similar improvements during the same time period. The IRS prefers documentation, but they recognize that records from many years ago might not be available. Just be reasonable with your estimates and be prepared to explain your methodology if questioned.

The capital gains tax rates are the same for vacant land vs. houses - it's based on your income and how long you've owned it, not the type of property. The big difference is you can't claim the primary residence exclusion ($250k/$500k) on vacant land since nobody lived there. Also, undeveloped land typically has fewer improvements you can add to the basis compared to a house where you might have done renovations, replaced a roof, etc. But things like clearing, grading, utility connections, surveys, and access roads still count!

For point #1, doesn't the recipient keep your basis though? So they might get hit with bigger capital gains tax when they sell? I thought that was one reason people wait to transfer at death - the step-up in basis.

You're absolutely right about the basis issue. When you gift assets during your lifetime, the recipient keeps your original basis (with some adjustments for gifts that have decreased in value). In contrast, assets transferred at death get a "step-up" in basis to fair market value, which can eliminate capital gains tax on all the appreciation that occurred during your lifetime. This is a critical consideration when deciding between lifetime gifts versus transfers at death. The best strategy often involves a mix - gifting some assets (especially those with minimal appreciation or those expected to grow significantly in the future) while holding other highly-appreciated assets until death to get the basis step-up. This gets pretty complex and is definitely one reason why people use estate planning professionals instead of just making outright gifts.

This is so true. My sister's ex-husband would have gotten half of her inheritance if my parents hadn't used a trust. The trust protected it as separate property that wasn't divided in the divorce.

There's also special needs trusts for disabled family members. Direct gifts could disqualify them from government benefits but a properly structured trust won't.

What kind of documentation would be considered solid proof for 100% business use? I have a personal vehicle too, so these test cars really are just for product development and demos.

For 100% business use, you'll want a detailed mileage log showing every trip was business-related. This should include dates, starting/ending locations, purpose of trips, and odometer readings. Having a separate personal vehicle helps your case significantly. Keep all maintenance receipts with notes about how they relate to business use. Take photos of the vehicles showing any business branding or modifications specific to your product testing. Also maintain a written business policy stating these vehicles are designated solely for product testing and not authorized for personal use.

Even if the vehicles are fully depreciated, you can still deduct maintenance expenses based on business use percentage. Depreciation is separate from ongoing operating expenses. I have a 12-year-old truck that's fully depreciated but still deduct all the maintenance costs for the business portion of its use.

Thanks for bringing this up - it's possible I didn't actually pay after responding. I sent back the response form agreeing to the amount, but now that I think about it, I don't remember if I included a check or if I was supposed to wait for a payment instruction. That could definitely be the issue. Has anyone here paid after responding to a CP2000? Did you include payment with your response or wait for them to send payment instructions?

You generally have two options: you can include payment with your CP2000 response, or you can wait for the IRS to send you a bill after processing your response. If you chose the second option and they haven't processed your response yet, that's likely why you received the CP3219A. I'd recommend calling the IRS (using one of the methods others suggested to get through) and ask about the status of your case. Tell them you agreed to the CP2000 and want to pay the amount due immediately. They should be able to take your payment over the phone or give you instructions for paying online. Make sure to get a confirmation number for any payment you make.

This happened to me too. My company's stock admin platform reported the sales to my brokerage but the cost basis information didn't transfer correctly. The IRS only saw the proceeds and thought I made way more profit than I actually did. What a mess.