That's an interesting approach I hadn't thought about. How would we structure the ownership in that case? Would we need to form an LLC or something similar to make it official?

You don't necessarily need an LLC, though many investors do use them for liability protection. You could simply have both names on the deed with specified ownership percentages (like 50/50 or whatever split makes sense based on your contributions). The simplest approach would be to use what's called "tenants in common" ownership, which allows for different ownership percentages and doesn't have right of survivorship (meaning if something happens to one owner, their share goes to their heirs, not the other owner). When you're ready to buy him out after the refi, you'd execute a deed transferring his ownership percentage to you, which is a fairly straightforward process.

That's not entirely accurate. While the annual gift exclusion is $18,000 per person, your solution still requires filing a gift tax return (Form 709) for the amounts over $18,000 to each person. The dad would need to report $49,500 to each person as taxable gifts ($67,500 - $18,000 = $49,500). While you're right that this likely won't result in actual gift tax being paid due to the lifetime exemption, it's still additional paperwork and reduces the lifetime exemption amount. The loan approach with proper documentation is cleaner if they truly intend to pay the money back.

11 How do you determine what counts as a "reasonable salary"? I've heard the IRS watches this closely. Is there a specific percentage of income that's considered safe?

5 There's no fixed percentage that's automatically considered "reasonable" - it depends on your industry, location, expertise, and what similar positions would pay in your area. Research salary data for your role and industry in your geographic area as documentation. Generally, your salary should be comparable to what you'd pay someone else to do your job. Too low a salary relative to distributions is a red flag for IRS scrutiny. Some tax professionals suggest roughly 50-60% of profits as salary can be appropriate in many cases, but again, it's situation-specific. Document your salary determination process and keep that documentation with your tax records.

1 Is there an income limit for the QBI deduction? I've heard it phases out at higher income levels but couldn't find a clear answer online.

This is great advice, but I think you mean Form 4506-T for the transcript request, not 8962 (which is for Premium Tax Credits). The Taxpayer Advocate suggestion is gold though - they really can help with these situations!

You're absolutely right, thank you for catching that! It is Form 4506-T for requesting transcripts, not 8962. I mixed up my form numbers. The Taxpayer Advocate Service was definitely the key to resolving my case. They have more direct access to various departments and can often get answers when regular channels fail. They're especially helpful in cases like this where you have evidence the IRS actually received payment but is still sending non-filing notices.

It's a CP59 notice, and it directs us to IRS.gov and the main IRS phone number, so unfortunately I think it's legitimate. We also verified by calling the IRS directly (not using any number from the letter). I wish it was a scam - would be easier to deal with!

Yep, CP59 is definitely a legitimate IRS notice for unfiled tax returns. Good job verifying independently by calling the main IRS number. Since we're dealing with a 2020 return (filed in 2021), you should know the IRS is still working through a massive backlog from the pandemic years. Paper returns especially got backed up severely. I've seen cases where returns were sitting in trailers in IRS parking lots for months before processing. Even with the payment being processed, the physical return could have been separated or lost. Follow the advice others have given about sending a clearly marked copy with a detailed cover letter. Persistence is key with these situations!

Is there any way to tell if I actually owe money to the state vs federal? I'm paranoid I'm going to mail something to the wrong place and then get in trouble for not paying.

I did get my transcripts but they don't show the detailed calculations for the Section 1341 credit. They just show the final number on the return. That's the problem - the IRS wants to see HOW we arrived at that number, and those worksheets weren't included with my filed return. I ended up using one of the suggested methods above and got it resolved though. Definitely wasn't paying $700 for calculations that should have been included originally!

I worked at a CPA firm for years. Most engagement letters specifically exclude audit representation, but they should be willing to provide copies of work they've already done at a minimal charge. We used to charge a $50-75 admin fee for pulling and sending existing worksheets. $700 is definitely taking advantage of the situation.