Thanks for mentioning student loan interest! We both finished paying ours off last year, so we might be able to deduct the interest from those final payments. Is that something we report on a different form than the itemized deductions?

Student loan interest is reported on Schedule 1 as an adjustment to income (sometimes called an "above-the-line deduction"), which means you can claim it even if you take the standard deduction. It's not part of your itemized deductions at all. You should receive Form 1098-E from your loan servicer showing how much interest you paid. The deduction starts phasing out at higher income levels though, so depending on your combined income, you might get a partial deduction or none at all.

This is bad advice. The OP already said their mortgage interest alone exceeds the standard deduction. Plus, if you're close to the line, itemizing state taxes and charitable giving can easily push you over. Missing legitimate deductions is literally giving away your money.

So basically there's a built-in conflict because what's good for me tax-wise might be bad for the seller? That explains why they seemed annoyed when I asked for more to be allocated to physical assets. Is there some kind of standard breakdown that's typically used or is it really just a negotiation?

Exactly! It's a natural tension in the deal. You want more allocated to assets you can depreciate quickly (equipment, furniture) while they want more in goodwill or real estate which gets better tax treatment for sellers. There's no standard percentage breakdown that applies to all businesses. It depends on industry type, asset condition, and what's actually being transferred. A manufacturing business might have 60% in equipment while a service business might be 80% goodwill. The key is that the allocation should reasonably reflect actual fair market values - you can't just make up numbers that benefit both parties tax-wise.

In my experience, good business brokers will facilitate the discussion about allocation but won't actually determine the final numbers. They might provide ranges based on similar deals they've seen. The actual allocation usually gets hammered out between the buyer's and seller's accountants/tax advisors with input from both parties. It's definitely something you want professional help with rather than just accepting whatever the other side proposes.

Would you say it's better to focus on understanding the big picture of how entities relate to each other first, or to get into the details of tracking specific transactions? I'm also struggling with this area.

Start with the big picture of entity relationships and the overall consolidation workflow. Understanding the hierarchy and how information flows between entities gives you the framework needed to then tackle specific transactions. Once you have that foundation, you can focus on specific areas like tracking inter-company transactions, which is often the most complicated part. But without understanding the entity structure first, the transaction details won't make sense in context.

Agreed! Working with payroll saved me during our last audit. They had reports that linked each employee's bonus accrual to the actual payment date, which was exactly what the IRS wanted to verify.

This is extremely risky advice that could lead to serious consequences. The IRS has specific rules about capitalization vs. expenses, and deliberately mischaracterizing capital improvements as immediate expenses is tax fraud. If audited, you'd face back taxes, penalties, and potentially criminal charges. The "my buddy does it" approach is how people end up with massive tax problems. The IRS may not audit everyone, but when they do audit someone incorrectly deducting capital expenses, it's a very straightforward case for them to win.

I appreciate the input, but I specifically mentioned I'm not trying to evade taxes. I want to do this legally. I'm frustrated by the rules, but I'm not looking to break them - just understand them better and find legal strategies within the system.

That's actually a common misconception. HSA funds generally can't be used to pay for health insurance premiums in most situations. There are a few exceptions (like COBRA or while receiving unemployment), but regular health insurance premiums aren't eligible HSA expenses even though other medical costs are.

Thanks for clearing that up! I definitely had that wrong then. I thought pretty much any health-related expense could be paid from an HSA. Good to know before I tried to use mine incorrectly!

I actually hadn't considered that angle! My employer's family coverage is definitely over that 9.12% threshold of our household income. That's really helpful information - I'm going to check out the marketplace options with this in mind. Thanks for bringing this up!