I'm going through a very similar situation with my late husband's stock portfolio, and this thread has been incredibly helpful! One thing I wanted to add that hasn't been mentioned yet - if your dad ever filed amended tax returns in the early 2000s, those might contain more detailed stock information than his original returns. Also, check if he kept any annual shareholder reports or proxy statements from AT&T around that time period. These documents sometimes included personalized information about shareholdings and could help verify the number of shares owned at specific dates. AT&T used to mail these religiously to all shareholders. For the cost basis calculation, I ended up using a combination of approaches from this thread - I found the historical stock price from Yahoo Finance for the exact purchase date, then called Computershare to verify the stock splits and corporate actions. The 2-for-1 split in May 2000 that someone mentioned earlier was crucial for getting the share count right before applying all the later spinoffs. One last tip: if you're still struggling after trying everything here, consider reaching out to a fee-only financial planner who specializes in tax issues. Sometimes spending $200-300 for a professional consultation can save you from making costly mistakes on complex stock basis calculations, especially when substantial amounts are involved.

I just went through this exact situation with my grandmother's old AT&T stock from 1998! Here's what worked for me after trying several approaches mentioned in this thread. First, I called AT&T investor relations at 1-800-348-8288 and specifically asked for "historical corporate actions for shares purchased in December 1999." They were actually very helpful and confirmed the 2-for-1 stock split in May 2000, plus walked me through all the subsequent corporate actions including the BellSouth merger. For the original cost basis, I used Yahoo Finance historical data for AT&T's closing price on the last trading day of December 1999, which was around $56 per share (before the 2000 split). The key is remembering to account for that early stock split - so if your dad bought 100 shares in December 1999, he would have had 200 shares by May 2000. The Warner Discovery spinoff allocation is definitely 71% to remaining AT&T stock and 29% to WBD shares. I found AT&T's official "Information Statement for U.S. Federal Income Tax Purposes" on their investor relations website under Tax Information, and it has the exact percentages and calculation examples. One thing that really helped me was finding old dividend statements in my grandmother's tax files - even though we couldn't find the original purchase records, those quarterly dividend payments from 2000-2001 helped confirm how many shares she actually owned after the split. Document everything you're doing - I kept a simple log of every call and website I used. Having that paper trail gave me confidence when filing the taxes. Good luck!

This thread has been incredibly educational! I'm dealing with a similar situation - first year S-Corp with about $2,800 in losses. Reading through all these responses has cleared up my confusion about the AAA account completely. I was initially planning to just leave Schedule M-2 blank since we didn't have any profits, but now I understand that tracking the AAA from year one is absolutely essential. The explanation about how the negative balance carries forward and affects future distributions really clicked for me. One thing that stood out was the mention of keeping detailed records for IRS inquiries. I'm definitely going to start a separate spreadsheet to track my AAA calculations year over year, especially since I plan to handle the filings myself for the next few years. Thanks to everyone who shared their experiences and expertise - this community is invaluable for those of us navigating S-Corp compliance for the first time!

This entire discussion has been incredibly helpful! I'm a small business owner who just elected S-Corp status for 2024, and I was completely overwhelmed by the AAA requirements on Form 1120-S. What really resonates with me is how everyone emphasizes that proper AAA tracking from day one is non-negotiable, even with losses. I initially thought I could skip Schedule M-2 since my business had a loss this year, but now I understand that would be a costly mistake. The explanation about how negative AAA balances carry forward and affect future distribution taxation is exactly what I needed to understand. It's clear that this isn't just busy work - it has real tax consequences down the road when the business becomes profitable. I'm also taking note of the advice about keeping detailed spreadsheet records of AAA calculations. Given how complex this can get with multiple years of data, having that documentation will be invaluable for both my own reference and potential IRS inquiries. Thanks to everyone who shared their real-world experiences and professional insights. This community has saved me from what could have been a significant compliance error!

Have you considered setting up a shared Dropbox or Google Drive folder where everyone uploads their documents? That's what I did for my family - created a secure folder structure for each person, had them upload docs throughout the year, then I blocked off a weekend to do all the returns using FreeTaxUSA. Way more efficient than doing them one by one with each person present.

I've been in a similar situation with preparing taxes for multiple family members, and what really helped me was switching to TaxAct Professional. Unlike their consumer version, the Professional edition allows you to prepare multiple returns under one license without needing PTIN/EFIN credentials if you're not charging for the service. The cost is around $200-300 for the software, which breaks down to about $40-50 per return for your 7 family members - much cheaper than paying a professional for each return. The interface is more streamlined than consumer software, and you can easily switch between different taxpayers without the interview-style questions. Another huge time-saver I discovered was creating a standardized document checklist for each family member. I send it out in January with a deadline of mid-February, so I can batch process everything in one weekend. Having all documents organized upfront makes the actual tax prep incredibly efficient. The learning curve is minimal if you're already comfortable with tax concepts, and it's saved me probably 15-20 hours compared to my old method of doing each return individually with consumer software.

Since everyone seems confused about the substantial presence test for F-1 students, here's what I learned after calling the IRS twice and talking to a school tax advisor: Years 1-5 on F-1: You are an "exempt individual" (not exempt from tax, but exempt from counting days for substantial presence test). File Form 8843 only. Year 6+ on F-1: You are no longer automatically exempt, so the substantial presence test applies. If you meet it (which you likely will after 183 days), you have two options: 1. File as a resident alien (subject to FICA and eligible for standard deduction) 2. Try to claim closer connection exception by filing both Forms 8843 AND 8840 The closer connection test looks at where your life is centered - bank accounts, property, family, future plans, etc. If they accept it, you continue filing as nonresident alien (no FICA tax, but also no standard deduction). The most common mistake I see is people only filing 8843 after year 5 without the 8840 form. That's not enough to claim the exception!

I went through this exact situation last year and want to share what worked for me. I was on F-1 status for 6 years and was terrified about the tax implications of becoming a resident alien. The key thing that helped me was understanding that the "closer connection exception" isn't just about paperwork - it's about your actual life circumstances. The IRS really does look at the totality of your situation. In my case, I had: - Maintained a bank account in my home country with regular deposits from family - Never applied for a green card or expressed intent to immigrate permanently - Kept my permanent address listed as my parents' home - Had no significant assets in the US (just basic student stuff) - Had concrete plans to return home after graduation/OPT I filed both Form 8843 and 8840 for my 6th year, including a detailed letter explaining my circumstances. The IRS never questioned it, and I saved about $2,800 in FICA taxes compared to filing as a resident. The most important advice I can give: document everything! Keep records of your foreign bank accounts, property ownership back home, family ties, etc. The burden of proof is on you to show your closer connection to your home country, so having solid documentation makes all the difference. Also, don't let tax software automatically decide your status - many programs aren't sophisticated enough to handle these exceptions properly.

Reading through this entire discussion has been absolutely enlightening! I'm currently in the research phase of purchasing my first STR property and had no idea how critical the active vs passive income classification could be for tax purposes. What's particularly valuable is seeing how many different scenarios qualify for active income status beyond just the 750-hour rule. @CosmicCowboy's breakdown of the 7 material participation tests completely changed my understanding - I was under the impression that if you couldn't hit 750 hours, you were automatically stuck with passive classification. The emphasis on detailed time tracking from day one really resonates with me. It seems like many of you discovered you were putting in significantly more hours than initially realized once you started documenting everything properly. I'm definitely going to implement a tracking system before I even close on a property. One question for the group: For those who successfully transitioned from passive to active classification, did you need to amend previous years' tax returns, or does the reclassification only apply going forward? I'm trying to understand if there's potential to recover taxes from prior years if someone discovers they actually qualified for active status all along. Also, are there any red flags or common mistakes that might trigger an IRS audit when claiming active income status for STR properties? I want to make sure I'm setting myself up for success from the beginning rather than trying to fix classification issues later. Thanks to everyone for sharing such detailed, real-world experiences - this thread should be required reading for anyone entering the STR space!

This thread has been incredibly comprehensive! As a tax professional who specializes in STR taxation, I wanted to add a few clarifications that might help everyone navigate this complex area more effectively. First, regarding the material participation tests - it's crucial to understand that these are "either/or" tests, not cumulative. You only need to satisfy ONE of the seven tests to qualify for active income treatment. Many STR owners get caught up trying to meet multiple criteria when passing just one test is sufficient. Second, documentation timing is critical. The IRS gives much more weight to contemporaneous records (created at the time the work was performed) versus reconstructed logs. If you're starting your STR journey, implement tracking from day one. If you're already operating, start detailed tracking immediately and note that you're beginning systematic record-keeping going forward. One often overlooked aspect: the "regular, continuous, and substantial" standard applies differently to rental real estate. Unlike other businesses, STR activities that are seasonal or intermittent can still qualify as material participation if they meet the intensity requirements during active periods. Finally, for those considering amended returns - while you can amend up to 3 years back, make sure you have rock-solid documentation. The IRS scrutinizes retroactive active income claims much more carefully than prospective ones. Consider having a tax professional review your participation evidence before filing amendments. This community's sharing of real-world experiences is invaluable for understanding how these complex rules apply in practice!