Thanks for this detailed breakdown everyone! As someone who's been considering MLPs for the income, this thread has been incredibly eye-opening. I had no idea about the multi-state filing requirements or the FATCA reporting issues. One question I haven't seen addressed - for someone just starting out with maybe $10K-15K in MLP investments, are these complications worth worrying about? It sounds like some of the worst issues (multi-state filings, foreign reporting) might not apply at smaller investment levels due to thresholds. Also, has anyone tried holding MLPs in a taxable account versus tax-advantaged accounts? I know @Lukas mentioned the UBTI issue with retirement accounts, but I'm curious if there are any other considerations for account placement strategy. The late K-1 timing issue alone might be a dealbreaker for me since I usually file early to get my refund quickly. Appreciate everyone sharing their real-world experiences!

As someone who's been dealing with MLPs for about 8 years now, I wanted to add a few practical tips that might help newcomers avoid some common pitfalls: **Timing Strategy**: I've learned to file extensions every year now. Rather than stress about late K-1s, I just plan for it. This gives me time to properly review everything instead of rushing, and honestly, the peace of mind is worth delaying my refund by a few months. **Record Keeping**: Create a dedicated folder (physical or digital) for each MLP from day one. Store your purchase confirmations, all K-1s, and keep a running basis calculation spreadsheet. I can't stress this enough - trying to reconstruct this information years later when you sell is a nightmare. **Software Considerations**: While TurboTax and similar programs can handle basic MLP reporting, they often struggle with complex situations like amendments or multiple MLPs. If you're planning to hold several MLPs long-term, budget for professional tax prep or invest in more robust software. **Exit Strategy**: Before you buy, have a plan for selling. The basis calculations get more complex each year, and if you're not tracking properly, you might end up paying more in taxes than necessary when you eventually sell. The income from MLPs can be attractive, but make sure you're factoring in the additional complexity and potential professional tax prep costs when calculating your real returns.

I went through this exact same situation last year and it was incredibly frustrating. After verifying in person in January, I got another notice in March asking me to verify again. What I learned is that the IRS has multiple verification "checkpoints" in their system, and sometimes completing one doesn't automatically clear the others. The key is to be persistent but strategic about how you approach it. Here's what worked for me: I called the dedicated Identity Verification line (800-830-5084) early in the morning around 7 AM when call volumes are lower. When I got through, I specifically asked them to check my "identity verification history" for the current tax year and requested they document in my account that I had already completed verification on [specific date]. The representative was able to see my previous verification and manually cleared the duplicate flag. My refund was released within 5 business days after that call. Don't just accept "the system shows you need to verify" - ask them to look deeper into your verification history. Keep all your documentation from your February verification handy when you call, including any confirmation numbers or paperwork you received.

I'm dealing with this same frustrating situation right now! I verified my identity in person back in January and just got another verification notice last week. It's so confusing because I thought once you verify, that's it for the tax year. Reading through everyone's experiences here, it sounds like this is unfortunately more common than it should be. The system glitch explanation makes sense - it's like their different departments don't communicate properly with each other. I'm planning to call the Identity Verification line (800-830-5084) tomorrow morning early like Hunter suggested. I kept my paperwork from January, so hopefully that will help when I explain I've already been through this process. Has anyone here had success getting this resolved without having to go through the entire verification process a second time? I'm hoping the phone call will be enough to clear whatever flag is stuck in their system.

Here's what's probably happening: SBTPG received your refund from IRS, took out their fees, and is now in the process of ACHing the rest to your bank. During that ACH transfer window, their system sometimes shows 'unfunded' because technically the money has left their system but hasn't fully processed at your bank yet. This transition period typically takes 1-3 business days.

This exact thing happened to me last month! SBTPG's system is notorious for showing "Unfunded" and "Unknown" during the transfer process between their bank and yours. Since your WMR still shows approved with 3/16 DDD and you mentioned your transcript has the 846 code, your refund has definitely been released by the IRS. The fact that SBTPG was showing "Funded" for 3 days means they received your money - the status change to "Unfunded" usually happens when they're processing the transfer to your actual bank account. Given that 3/16 was a Friday, banking transfers don't process over weekends, so you're looking at Tuesday/Wednesday for it to potentially hit your account. I know the waiting is nerve-wracking, especially when the status changes like that, but based on what you've described this sounds like normal SBTPG processing weirdness rather than an actual problem with your refund.

Great question about futures taxation! I've been trading futures for a few years now and can confirm what others have said about the 60/40 rule. One thing I'd add is that you should also consider the wash sale rules, which work differently for futures compared to stocks. With futures contracts under Section 1256, wash sales don't apply the same way they do for securities. This means you can actually realize losses for tax purposes even if you immediately re-enter a similar position, which can be helpful for tax planning throughout the year. Also, since you're projecting such significant profits, you might want to look into making estimated quarterly tax payments to avoid underpayment penalties. The IRS generally wants you to pay as you go, especially with income this large. You can use Form 1040ES to calculate and make these payments. One last tip - keep detailed records of all your trading activity, including timestamps, contract specifications, and P&L for each trade. The IRS can be pretty strict about substantiating trading income, especially at higher amounts. Having clean records will save you headaches if you ever get audited.

One thing I haven't seen mentioned yet is the potential impact of state tax planning with these kinds of profits. Illinois has that flat 4.95% rate, but if you're making $3.2M annually from trading, it might be worth exploring whether establishing residency in a no-income-tax state like Florida or Texas could make sense. The state tax savings alone would be about $158k per year at your income level. Obviously there are costs and complications with relocating, but the math becomes pretty compelling at these profit levels. You'd need to be careful about establishing true residency though - just getting a PO box won't cut it. The state needs to see you're genuinely living there. Another consideration is that some states have specific trader-friendly provisions. For example, certain states don't tax futures trading income the same way they tax other investment income. Just something to think about as you're planning for this windfall. With proper planning, you could potentially keep hundreds of thousands more of your profits over time.

One additional consideration that hasn't been mentioned - make sure you understand the timing implications for your 2025 tax filing. Since this buyout is happening this year, you'll need to report it on your 2025 tax return (filed in 2026). If you're planning to move after the buyout, be aware that the Section 121 exclusion is a once-every-two-years benefit. So if you buy another home and need to sell it quickly for any reason, you won't be able to use the exclusion again until 2027. Also, since you're in Illinois, double-check if there are any state-specific forms or requirements. While Illinois generally follows federal tax treatment for capital gains, it's worth confirming there aren't any additional state reporting requirements for property transfers between unmarried partners. The fact that you've lived there as your primary residence for 3 years puts you in a good position with the federal exclusion, but documenting everything properly now will save you headaches next tax season.

I just want to emphasize how important it is to get proper documentation for everything, especially since you mentioned this is a breakup situation. Even if things are amicable now, having everything legally documented protects both of you. A few things I learned from my own similar situation last year: 1. Get a formal property appraisal - don't just rely on online estimates or comparable sales. The $500 cost is worth it to establish an indisputable fair market value. 2. Have a real estate attorney draft a buyout agreement that clearly states the property value, your equity calculation, payment terms, and timeline for deed/mortgage changes. This isn't just for legal protection - the IRS may want to see this documentation if they ever question your capital gains calculation. 3. Keep every receipt and document related to your ownership: original purchase documents, mortgage statements showing principal payments, receipts for any improvements (even small ones), and records of shared expenses. 4. Consider the timing carefully. Since you qualify for the Section 121 exclusion, you're in good shape tax-wise. But remember you can only use this exclusion once every two years, so if you're planning to buy another place soon, factor that into your decision-making. The fact that you've lived there for 3 years puts you in an excellent position with the federal exclusion, and since Illinois follows federal treatment, you shouldn't have additional state complications. Just make sure everything is properly documented now to avoid headaches during tax season.