I've been through a similar conversion situation and wanted to share a few additional considerations that might be helpful. One thing that caught me off guard was the quarterly estimated tax planning aspect. Even with $0 starting basis, once your S-Corp starts generating income, you'll owe taxes on that pass-through income regardless of whether you can take distributions. I'd recommend setting up a system early to track your quarterly tax obligations separately from your basis tracking. In my first year, I made the mistake of using business profits to pay down debt without setting aside enough for estimated taxes, which created a cash flow crunch at year-end. Also, regarding the business credit card debt - make sure you understand how the interest and fees on that debt are treated for tax purposes after conversion. Since it's pre-conversion debt, the interest remains deductible as a business expense, but you'll want to keep clean records showing these were legitimate business expenses from before the S-election date. One practical tip: consider opening a separate "tax reserve" account where you automatically transfer a percentage of any S-Corp profits. This helps avoid the temptation to use that money for debt payments or operations when tax time comes around. I use about 30% as a safe margin, but your specific rate will depend on your overall tax situation. The basis tracking gets much easier after the first year once you establish good systems and habits. Hang in there - the complexity is frontloaded but becomes routine with time!

I'm in a very similar situation and this discussion has been incredibly enlightening! I converted my SMLLC to S-Corp status in January 2024 with about $45,000 in business debt against $18,000 in assets, so I'm also starting with $0 basis. One thing I've learned from my accountant that might be helpful - if you're planning to take any salary from the S-Corp (which you're required to do if you're actively working in the business), make sure you understand how payroll taxes interact with your basis situation. The salary you pay yourself doesn't affect your stock basis, but it does reduce the company's profits that would otherwise flow through and increase your basis. I've also found it helpful to create a simple monthly checklist to stay on top of the S-Corp requirements: updating basis tracking, reviewing guarantee documentation, calculating estimated tax reserves, and ensuring I'm maintaining proper corporate formalities. The administrative overhead is definitely more than an SMLLC, but having a systematic approach makes it manageable. For anyone considering the capital contribution route mentioned earlier, one timing consideration is that if you make the contribution early in the year, it gives you more flexibility for distributions later if the business performs better than expected. I'm planning a modest contribution in Q2 to create some positive basis cushion. The complexity seems overwhelming at first, but reading through everyone's experiences here gives me confidence that it's very manageable once you establish good systems. Thanks to everyone for sharing such detailed, practical advice!

I made a similar amount last year ($14k) and was disappointed to learn I couldn't get my Social Security and Medicare taxes back. But I did qualify for the Earned Income Credit which gave me back almost the same amount! Make sure you check if you qualify based on your age and income.

Just to add some clarity to what others have said - you're correct that Social Security and Medicare taxes (FICA) aren't refundable in most cases, but don't give up hope on getting money back! At your income level of $13,500, you should definitely look into the Earned Income Tax Credit (EITC) if you meet the age requirements (25+ if single with no kids). Also, make sure you're claiming the standard deduction ($13,850 for 2023 if single) which should zero out any federal income tax owed. And double-check that you're not missing any other credits you might qualify for - things like education credits if you're a student, or the Child and Dependent Care Credit if applicable. The key is understanding that while FICA taxes fund Social Security and Medicare (which you'll benefit from later), income taxes can often be fully refunded through deductions and credits when your income is low. Focus on maximizing those refundable credits!

Has anyone mentioned Form 4797? You'll need to fill this out when reporting the sale. Part of your gain might be subject to depreciation recapture at ordinary income tax rates, while another portion might qualify for capital gains treatment. TurboTax should walk you through this, but it needs those basis figures first.

I went through this exact same situation last year with my contractor van! The key thing to remember is that you need to look at ALL your past tax returns to add up the total depreciation you've claimed over the years. For your "Basis for gain/loss" - take your original $15,000 cost and subtract every penny of depreciation you've claimed on that van since you bought it. If you claimed $10,000 total in depreciation over those 6-7 years, your basis would be $5,000. For the "AMT Basis" - this is trickier because AMT uses different depreciation schedules (usually slower depreciation), so your AMT basis will likely be higher than your regular basis. One tip: since you used it 95% for business, make sure you're only entering the business portion when TurboTax asks. The personal use portion (5%) gets handled separately. Don't stress too much about audit flags - as long as you're reporting the sale and have reasonable documentation of your depreciation over the years, you should be fine. The IRS expects business vehicles to be sold eventually!

Great question! Your 2022 values are actually still pretty solid for 2025 filing. I've been doing my own donations for years and those numbers align well with current thrift store prices. One thing I'd add that hasn't been mentioned - if you're using software like TurboTax or FreeTaxUSA, they often have built-in donation value guides that get updated annually. These can be helpful for cross-referencing your values. Also, don't forget about accessories! Belts ($3-5), purses ($8-15), and ties ($4-8) can add up if you donated any. And if you donated any designer items or higher-end pieces, you might be able to justify higher values as long as they were in good condition. The key is being reasonable and consistent. Your list shows you're being thoughtful about this rather than just making up numbers, which is exactly what the IRS wants to see.

One thing to keep in mind is that the IRS has gotten stricter about non-cash charitable deductions in recent years, especially after seeing inflated valuations. Your values from 2022 are actually quite reasonable and conservative, which is good. I'd suggest sticking with those values or even being slightly more conservative. The difference between claiming $10 vs $12 for jeans isn't worth the potential audit risk. What matters most is that you can demonstrate you used a consistent, reasonable method for valuation. Also, make sure you're only claiming items that were actually in "good used condition or better." The IRS specifically states that items with significant wear, stains, or damage don't qualify for deductions at all. When in doubt, it's better to exclude questionable items rather than risk having your entire donation questioned during an audit. Document everything well - keep that Goodwill receipt, maintain your itemized list, and if possible, take photos before donating. The goal is to show you made a good faith effort to determine fair market value using reasonable methods.

One thing that caught me off guard when I had a big gambling win last year was the backup withholding situation. If you don't provide your SSN to the casino or if there are issues with your tax ID, they'll withhold 24% for backup withholding on top of the regular withholding. This happened to me when I forgot my ID at a casino and they couldn't verify my SSN immediately. Also, for anyone dealing with multiple gambling venues, make sure you're keeping track of all your W-2G forms. I had winnings from three different casinos and two online poker sites, and it was a nightmare trying to reconcile everything at tax time. Each venue reports to the IRS separately, so you need to make sure you're accounting for all of them on your return. The IRS matches these forms to your tax return, so missing even one can trigger an audit or at least some unpleasant correspondence. I learned this the hard way when I missed a $1,800 win from a smaller casino and got a notice months later.

Just wanted to add something that might help with the confusion about withholding vs. final tax liability. I work in casino operations and see this misunderstanding all the time. The key thing to remember is that gambling winnings are treated exactly like a bonus from your employer. When you get a work bonus, your employer withholds taxes at a flat rate (usually 22% for bonuses), but your actual tax rate depends on your total income for the year. Same principle applies to gambling. So if you win $800,000 like in your example, the casino withholds 24% ($192,000), but when you file your taxes, that $800,000 gets added to whatever other income you had. If your total income puts you in the 37% bracket, you'll owe 37% on the portion that falls in that bracket - meaning you could owe significantly more than what was withheld. This is why it's crucial to set aside additional money beyond what's withheld, especially for large wins. I've seen too many people spend their winnings thinking the 24% withholding covered their full tax obligation, only to get hit with a massive bill later.