One thing to consider that hasn't been fully explored is the timing aspect. If your parents are elderly or have health concerns, inheriting the property upon their passing would give you that stepped-up basis Dmitry mentioned, potentially saving you significant capital gains taxes later. However, if they're younger and healthy, the gift now might make more sense, especially since they can use their lifetime exemption ($13.61 million per person). Just remember that this exemption amount is set to decrease significantly after 2025 unless Congress acts. Another consideration: if you receive the property as a gift now, you'll need to maintain records of the original purchase price, any improvements made, and the fair market value at the time of transfer. This documentation will be crucial for calculating your basis when you eventually sell. Have you looked into whether a partial gift might work? For example, your parents could gift you a percentage of the property each year using their annual exclusions, gradually transferring ownership over time while minimizing gift tax implications.

Another important factor to consider is the mortgage situation. If there's still a mortgage on the property, transferring ownership can trigger the "due on sale" clause, potentially requiring the full loan balance to be paid immediately. Even though this rarely gets enforced between family members, it's worth checking with the lender beforehand. Also, don't forget about title insurance implications. When you transfer via quit claim deed, you won't get the same title protections as you would with a warranty deed. The quit claim only transfers whatever interest your parents have - if there are any title defects or liens, you'd inherit those problems too. I'd also recommend getting a professional appraisal done before any transfer to establish the fair market value for tax purposes. The IRS can challenge valuations that seem too low, so having proper documentation is crucial whether you're reporting a gift or calculating basis for future capital gains.

I'm experiencing the exact same situation! Just received my EIN confirmation yesterday for my new freelance marketing business and that % symbol next to my name completely threw me off. I spent the entire evening convinced I had somehow made a critical error on my SS-4 application. After reading through this entire thread, I feel like such a weight has been lifted off my shoulders. It's incredible how many of us go through this identical panic over what turns out to be just the IRS's internal shorthand for sole proprietor status. The % symbol is completely normal and exactly what we should expect as freelancers and small business owners. What really bothers me is how preventable all this stress would be if the IRS just included a simple explanation of their symbols. We're talking about adding maybe two lines of text to their confirmation documents, but instead they leave thousands of new entrepreneurs to figure it out through online forums and frantic Google searches. This thread has been an absolute lifesaver - thank you to everyone who shared their experiences and helped explain what that mysterious % symbol actually means. It's such a relief to know we're all in the same boat and that this is just another one of those quirky IRS things we have to learn to navigate as business owners. Now I can finally focus on growing my marketing business instead of worrying about cryptic symbols!

I just went through this exact same situation two months ago when I started my freelance writing business! That % symbol on my EIN confirmation had me completely spiraling - I was convinced I'd somehow messed up my SS-4 application and would have to start the whole process over again. After reading through all these responses, it's clear that this is such a common experience for new business owners. The % symbol is just the IRS's internal way of indicating sole proprietor status, which is exactly what most of us freelancers should be classified as. There's absolutely nothing wrong with your application! What's really frustrating is how easily the IRS could prevent all this confusion by simply adding a brief explanation of their symbols somewhere on the confirmation document or in their instructions. It would take them maybe 30 seconds to add a note like "% = Sole Proprietor" but instead we all end up here frantically searching for answers. This thread has been incredibly helpful for so many people - it's like a support group for confused new entrepreneurs! Your graphic design business sounds exciting, and now that you know the % symbol is totally normal, you can focus on what really matters: building your client base and creating amazing work. Good luck with your new venture!

This is a complex situation that many of us face with aging parents. One additional consideration that hasn't been mentioned yet is the potential impact of state gift taxes. While most states don't have their own gift tax, a few do (like Connecticut and Minnesota), so if you're in one of those states, you might need to factor that into your planning as well. Also, if your dad's condition progresses and he eventually needs more intensive care like assisted living or nursing home care, the financial dynamics change significantly. Many of these facilities can provide detailed breakdowns of medical vs. custodial care costs, which becomes important for both gift tax purposes and potential Medicaid planning down the road. Have you considered setting up a formal care agreement with your father? This could help clarify the arrangement and potentially provide additional tax benefits. Some families find it helpful to have a written agreement that specifies what expenses are being covered and by whom, especially when multiple family members might be contributing to care costs.

Regarding your questions about formal care agreements and Medicaid planning - these are excellent considerations that can save you headaches down the road. For the care agreement, while you can find templates online, I'd strongly recommend having an elder law attorney draft one for your specific situation. A proper agreement should specify what services are being provided, payment amounts, and clearly distinguish between medical and non-medical care. This documentation can be invaluable not only for family transparency but also for potential future Medicaid applications. As for Medicaid lookback, there's a 5-year lookback period for asset transfers. However, payments made directly to care providers for your father's benefit (like you're doing now) generally aren't considered improper transfers during the lookback period, since you're paying for services rather than gifting assets. The key is maintaining good records showing the payments were for legitimate care expenses. One strategy some families use is transitioning to paying from the parent's own funds (if available) as their care needs increase, which eliminates both gift tax concerns and potential Medicaid complications. If your dad has assets but limited liquid funds, converting some assets to cover care costs might be worth exploring with a financial planner who specializes in elder care. The documentation you're building now by tracking medical vs. non-medical expenses will be extremely valuable if Medicaid planning becomes necessary later.

Great question! I went through this exact situation with my father's estate last year. You definitely want to use the 2023 Form 1041 since that's the tax year when your fiscal year ends (November 2023). A few things that helped me when I was preparing the return: - Make sure you have all the investment transfer documentation organized. Since you mentioned investments were still being moved to the estate's EIN, you'll need to be really careful about which income belongs to the estate vs. what should be reported elsewhere. - The fiscal year election is actually pretty smart given your situation. It sounds like you made the right call there, even if settling is taking longer than expected. - Consider getting Publication 559 from the IRS - it's specifically for survivors, executors, and administrators. Much clearer than trying to figure things out from the general 1041 instructions. - Don't forget that estates get a $600 exemption, and you can deduct reasonable administration expenses. One word of caution: if this is your first estate return and there are significant assets or complex investments, you might want to at least have a consultation with a different CPA (one who specializes in estates) before filing. I know you had a bad experience, but estate returns have some unique rules that are easy to miss. Good luck with everything!

As someone who's been through estate administration, I want to emphasize a few key points that haven't been fully covered: First, yes, use the 2023 Form 1041 for your fiscal year ending November 2023. That's definitely correct. Second, since you mentioned you're "nowhere close to settling the estate by December," you'll likely need to file another 1041 for the following fiscal year (November 2023 to November 2024). Estates can remain open for years, and you'll need to file annual returns until everything is distributed and the estate is closed. Third, be very careful about estimated tax payments. If the estate owes more than $1,000 in tax, you may need to make quarterly estimated payments for the current fiscal year. This caught me off guard with my mother's estate. Finally, regarding your investment transfers - make sure you understand the difference between estate income and distributable net income (DNI). If you distribute assets to beneficiaries during the fiscal year, there are specific rules about how much taxable income flows through to them versus staying with the estate. The learning curve is steep, but it's absolutely doable if you're methodical about it. Keep detailed records of everything - dates, amounts, purposes. You'll thank yourself later if the IRS has questions.

One thing nobody's mentioned - if your business doesn't end up getting off the ground, those expenses become personal losses subject to the hobby loss rules, which are WAY less favorable. The IRS could argue it was never a real business if you don't eventually show profit motive. Document everything with a clear business plan showing how you expect to become profitable!

Great question! I went through something similar with my consulting LLC last year. A few key points that really helped me: 1. **Separate everything immediately** - Even without income, open a business bank account and get a business credit card. This creates a clear paper trail and protects your personal assets. 2. **The "active business" test is crucial** - You don't need income, but you need to show you're actively trying to generate it. Having your website live, marketing materials ready, or even just being available to take on clients can qualify. 3. **Track EVERYTHING** - I use a simple spreadsheet with columns for date, amount, vendor, category, and business purpose. Take photos of receipts immediately. 4. **Consider your election timing** - You can actually choose when your tax year starts for a new LLC, which might help optimize when you claim those startup deductions. The partnership return (Form 1065) is required even with zero income if you had expenses, but the losses flow through to your personal returns where they can offset other income. Don't wait until you have revenue - getting your systems set up now will save you major headaches later!