Does it matter that she refused to participate in the tax court case though? Seems unfair if she gets half when she thought it was a waste of time and wouldn't help.

While it seems unfair, her refusal to participate in the tax court case typically wouldn't eliminate her right to part of the refund. Courts generally look at the source of the funds used to pay the original tax bill (joint savings in your case) rather than who pursued getting it back. Think of it this way - if you had a joint debt that she paid from joint funds, and later you discovered an error and got a refund, the nature of the original payment (joint funds for a joint liability) usually determines how courts view the refund. Your efforts to secure the refund might entitle you to compensation for your time and costs, but the underlying refund typically remains jointly owned if it came from a joint return paid with joint funds.

What kind of penalty did they give you? Was it just interest or something more?

Have you ever been audited though? I'm worried that ignoring anything on the K1 could trigger something later. Just because you haven't had an issue yet doesn't mean the IRS won't come back years later.

No, I've never been audited for this issue. You're not really "ignoring" anything on the K-1 though - you're using all the information that's relevant to your individual tax situation. The K3 just provides additional detail for certain foreign transactions that most domestic investors don't need to report. The IRS generally focuses audit resources on areas where significant tax might be underreported. For most domestic investors in MLPs, waiting for a K3 that won't change your tax liability isn't likely to be a high audit priority. I've been filing this way for over 7 years with multiple MLPs and haven't received so much as a notice.

TurboTax is super annoying with MLP K-1s. I had the same warning last year and called their support. They confirmed that if you're a US-only investor with no foreign tax credit claims, you can override that warning and proceed with filing. There's actually a checkbox somewhere in the foreign income section where you can indicate you have no foreign filing requirements.

Do we know for sure they're expiring? I thought there was talk about making some of the changes permanent.

As the law currently stands, most of the individual tax provisions will expire after 2025. Congress would need to pass new legislation to extend them. Some of the business provisions were made permanent, but the personal income tax changes were temporary. There's always talk about extending popular tax cuts, but that requires congressional action. Given how difficult it is to get anything passed these days, I'm planning for the expiration while hoping for an extension. Best to be prepared either way.

TurboTax won't let you model future years accurately. I'm a CPA and we use professional software that can project scenarios with different tax laws. Your best bet is to consult with a tax professional for retirement planning that factors in potential law changes.

That's really good advice - I didn't even think about potential blowback. Did you experience retaliation at your job after reporting? I've already saved some evidence on my personal drive and took screenshots of the conversations with my boss, but I should probably be more systematic about it.

I did face some subtle retaliation. Nothing they could get in legal trouble for, but I was suddenly excluded from meetings, my ideas were dismissed, and I was passed over for a promotion that I was previously told was coming my way. Beyond what you're already doing, I'd recommend keeping a detailed journal with dates, times, and descriptions of all conversations about the embezzlement. Include who was present and what was discussed. If you have verbal conversations, follow up with an email summarizing what was discussed ("Just to confirm our conversation today about..."). This creates a paper trail. Also, familiarize yourself with whistleblower protection laws in your state, as they vary significantly. The federal protections mainly apply to government employees or contractors, not necessarily private business employees.

Do you know approximately what percentage they usually give as a reward? Like is it 10% of what they recover or something like that?

January is almost always better because you defer the taxes for a whole year. I always push mine to January.