Just wanted to share my experience as someone who recently went through this exact same situation! I was also totally confused when my potential employer asked for a "gross income redacted tax return" - had never heard of it before either. What worked for me was creating a simple checklist of what to redact vs. what to keep visible. I redacted all the dollar amounts showing my actual income (wages, salary, AGI, taxable income) but kept visible things like my name, address, filing status, employer names and EINs, and the tax year. The key is that employers want to verify you've been filing taxes and see your employment history, but they don't need to know your exact salary. I used the PDF editor that came with my computer to add black rectangles over the income numbers, then saved it as a new file. The whole process took maybe 10 minutes once I figured out what needed to be covered. My employer accepted it without any questions and I got the job! Don't overthink it - it's really just about protecting your financial privacy while still showing you're a responsible taxpayer. Good luck with your interview!

This is such a comprehensive thread - thank you everyone for sharing your experiences! As someone who works in accounting, I just wanted to add a few professional tips that might help: 1. Always work with a COPY of your tax return, never the original. Save the original in a safe place and make multiple copies for redaction purposes. 2. If you're uncomfortable doing it yourself, many local tax preparation offices (H&R Block, etc.) will help you create a redacted version for a small fee - usually around $25-50. 3. Some employers might also accept just your W-2s with income amounts redacted instead of the full return, which can be simpler since there are fewer forms to deal with. 4. Pro tip: After you redact everything, do a final check by covering the visible parts with your hand and asking yourself "could someone figure out my income from what's still showing?" Sometimes things like tax owed/refund amounts can give away income ranges. 5. Keep a copy of what you submit for your records - some companies take a while to get back to you and you might forget exactly what you sent. Hope this helps and congrats on getting the interview! The fact that they're asking for this documentation usually means they're seriously considering you for the position.

One resource that hasn't been mentioned yet is checking with your local assessor's office for any "improvement cards" or building cards from when the home was constructed. These cards often contain detailed information about the original construction including square footage, materials used, and sometimes even contractor estimates that were filed with the building permits. Also, if your aunt and uncle have any old checkbooks or bank statements from 1988-1989, those could provide valuable evidence of construction-related expenses. Even if they don't show the full construction cost, payments to contractors, material suppliers, or construction loans can help establish a minimum baseline for your cost basis calculation. Another angle to consider is contacting local architects who were practicing in the late 1980s. If the home was custom-designed, the architect might still have records of the project including cost estimates and specifications. Many architectural firms maintain project archives for decades. For the improvements over the years, try to think seasonally - roof work is often done in summer, HVAC replacements in spring/fall, etc. This might help jog memories about when major improvements were made, which can help you research appropriate costs for those time periods. The key is building a comprehensive file that shows your thorough good-faith effort. Even if individual sources don't provide complete answers, the cumulative evidence from multiple sources creates a strong foundation for your basis reconstruction.

As a tax professional who has handled numerous similar cases, I wanted to add one more crucial resource that's often overlooked - your state's Department of Labor or Employment Security office. Many states collected detailed wage and cost data from the construction industry throughout the 1980s for unemployment insurance and prevailing wage determinations. These reports often include regional construction cost breakdowns that can provide excellent supporting documentation for your basis reconstruction. The data is particularly valuable because it comes from an independent government source with no incentive to inflate costs. Also, don't forget to check if your aunt and uncle ever took out a home equity loan or line of credit over the years. The appraisals required for these loans often separate land value from improvement value and can provide multiple data points showing how the property's basis evolved over time. One practical tip: when documenting all those improvements over 35+ years, consider creating a visual timeline with photos if available. The IRS responds well to organized presentations that clearly show the evolution of the property and justify the basis adjustments you're claiming. Remember that the IRS's primary concern is that taxpayers make reasonable good-faith efforts to determine correct basis. The comprehensive approach outlined in this thread demonstrates exactly that kind of diligence. Your aunt and uncle should feel confident that they're taking the right steps to handle this situation properly.

Isn't there a hobby loss rule or something too? I thought if you make money selling stuff regularly, even personal items, the IRS might consider it a hobby and there are different rules for that vs a business vs just selling your personal junk?

This is a great question that many people face when transitioning from business to personal sales! Based on your description, you're absolutely right to treat these current sales as personal property rather than business income. The key factors working in your favor are: 1) You're not actively running a reselling business anymore, 2) These are items you've owned for many years (15+ years for some), 3) You have no receipts because they were gifts or personal purchases from long ago, and 4) You're likely selling them for less than their original value. Even though you'll receive a 1099-K if you exceed $600 in sales, you should report this on Schedule 1 (Line 8z - Other Income) with a description like "Personal items sold at loss" rather than on Schedule C. This shows the IRS you're properly accounting for the 1099-K without incorrectly categorizing it as business income. Just make sure to keep good records showing these were long-term personal possessions - photos of items before selling, notes about when you acquired them, any old emails showing they were gifts, etc. This documentation will be valuable if the IRS ever questions why you had Schedule C income one year but not the next.

I just went through this exact same situation last year and wanted to share what I learned. The timing confusion around education expenses is really common, especially with late payments. The key principle is simple: you claim education expenses in the tax year you actually paid them, not the academic year they're for. So your January 2025 payment gets claimed on your 2025 tax return (filed in 2026), even though it was for Fall 2024 classes. For your current 2024 return, you can only claim what you actually paid in 2024. Based on what you described, it sounds like you might not have any out-of-pocket payments to claim for 2024 if the scholarship covered everything until your late payment. One tip for next year: keep detailed records of exactly when you made that January payment, including bank statements or receipts from the school. The IRS may want to see proof of payment dates if there are ever questions about your education credits. Also, don't stress too much about "missing out" this year - you'll be able to claim that $7.2k payment on next year's return and potentially get a nice refund then!

I just went through something very similar with my graduate school payments! The confusion about timing is totally understandable - I spent hours trying to figure this out too. The bottom line is that you report education expenses in the year you actually paid them, not the academic year they cover. Since you paid in January 2025, that $7.2k goes on your 2025 tax return (which you'll file next year), not your current 2024 return. For your 2024 return, you should only report what's actually reflected from payments made in 2024. It might feel like you're "losing out" on credits this year, but you're not - you're just shifting them to next year when you actually made the payment. One thing that helped me was thinking of it like any other purchase - if I buy textbooks in January for spring semester, that's a January expense regardless of when I use the books. Same principle applies to tuition payments. Make sure to keep all your documentation from that January payment (receipts, bank statements, etc.) so you can properly claim it next year. And don't forget to check if you qualify for the American Opportunity Credit vs. Lifetime Learning Credit based on your student status!

As someone who recently navigated a similar situation with my father's estate, I wanted to add a few practical considerations that might help with your planning. One thing that caught my attention in your post is that you mention keeping the checking account separate from the trust "for easier access to funds for paying bills after she passes." Just be aware that many banks will temporarily freeze joint accounts when they're notified of a death, even when there's a surviving joint owner. This happened to us and created complications when we needed to pay final expenses quickly. If maintaining easy access for post-death expenses is a priority, you might want to consider keeping a smaller amount in the joint account (maybe $10-15k) and moving the larger balance into the trust. This would minimize any gift tax concerns while still providing the liquidity you're planning for. Also, regarding your question about the collectible scenario - the same gift tax principles would apply, but there's an additional consideration with inherited assets. When someone inherits property and then sells it, they get a "stepped-up basis" equal to the fair market value at the time of inheritance. So if your brother inherited a $50k collectible and immediately sold it for $50k, there would be no capital gains tax on the sale. But if he then gave you $25k from the proceeds, that transfer would still be subject to gift tax rules. The documentation strategies others have mentioned (letter of intent, memorandum, etc.) are really valuable, but getting the account structure right from the beginning is even better if it's feasible for your family's situation.

I've been following this discussion with great interest as I'm in a very similar situation with my elderly father. One aspect I haven't seen mentioned yet is the importance of communicating with the bank ahead of time about your intentions and the account structure. When we set up my dad's joint account, I made sure to have a conversation with the bank manager about what would happen when he passes away. They explained their specific procedures for handling joint accounts after a death, including what documentation they would need and how long any holds might last. Some banks are more flexible than others, and knowing their policies in advance can help you plan better. The bank also mentioned that having a letter on file from the account holder (your mom, in this case) stating the purpose of the joint ownership and her intentions for the funds can sometimes help streamline the process later. They said it's not legally required, but it can help clarify the situation for their internal reviews. Another thing I learned: some banks offer "convenience accounts" that are specifically designed for situations like yours, where an adult child helps manage a parent's finances. These accounts sometimes have different ownership structures that might avoid some of the gift tax complications you're concerned about. It might be worth having a conversation with your mom's bank about the best account structure for your specific goals. Every bank handles these situations slightly differently, so getting their input could help you make the most informed decision about whether to restructure things now or stick with your current approach.