As someone who's been through multiple deployments and dealt with complicated military tax situations, I'd strongly echo what others have said about avoiding those personal equipment deductions. The IRS is pretty strict about what constitutes a legitimate business expense versus personal equipment. One thing I'd add - if you're looking for ways to maximize your tax benefits as military, focus on the things that are clearly allowed: the moving expense deductions (which are still available for military even after the tax law changes), making sure you're properly excluding combat pay when beneficial, and taking advantage of any state-specific military benefits in your home state. Also, consider contributing to a TSP (Thrift Savings Plan) if you're not already maxing it out. The tax benefits there are substantial and completely legitimate. It's a much better use of your money than risking an audit over equipment that likely won't qualify anyway. The "ask for forgiveness rather than permission" approach with the IRS is definitely not recommended - they don't tend to be very forgiving, and military personnel can face additional scrutiny if there are issues with their taxes.

Active duty Air Force here - I've been dealing with military taxes for about 8 years now and want to emphasize what others have said about being very careful with equipment deductions. The IRS has gotten much stricter about military deductions since the Tax Cuts and Jobs Act. I learned this the hard way when I tried to deduct some tactical gear a few years back, thinking it was job-related. Got a letter from the IRS asking for documentation showing it was "ordinary and necessary" for my military duties. Since I couldn't prove the military required me to purchase it personally (versus issuing it), they disallowed the deduction plus interest. For your specific situation with the pistols and hockey gear - these would almost certainly be classified as personal expenses. The IRS doesn't care if your personal firearms use the same ammo as your duty weapon, or if hockey keeps you in shape for PT tests. They look at whether the military specifically required YOU to purchase these items at your own expense. Focus on the guaranteed benefits instead: TSP contributions, legitimate PCS moving expenses, and if you deploy, make sure you're handling combat pay exclusion correctly. These are worth way more than trying to squeeze deductions out of personal equipment purchases. The audit risk just isn't worth it, especially when there are plenty of legitimate military tax benefits you can take advantage of.

One thing I'd add to the excellent advice already given is to make sure you have all your documentation organized before filing. For a business vehicle sale, you'll need: 1. Original purchase receipt showing the $62k cost 2. Your tax return from the year you bought the SUV to see what depreciation you claimed 3. Sale documentation showing the $39k sale price 4. Mileage logs if you have them (though since it was 100% business use, this is less critical) Also, since you mentioned this was for an executive transportation service, make sure you didn't claim any personal use that would complicate the calculation. The fact that you used it 100% for business actually simplifies things - you just need to get the depreciation basis calculation right. If you're still lost after reviewing your prior year return, don't hesitate to get professional help. A mistake on Form 4797 can be costly, especially if the IRS determines you under-reported income from the sale. Better to pay a CPA for an hour of their time than deal with penalties and interest later.

I went through this exact same situation when I closed my consulting business and sold my company car. The key thing that tripped me up initially was understanding that even though I had a "loss" on paper (bought for $62k, sold for $39k), the tax treatment depends entirely on how much depreciation I had claimed. In my case, I had taken Section 179 expensing for most of the vehicle cost in the purchase year, which meant my adjusted basis was very low. When I sold the car, I actually had to report most of the sale proceeds as ordinary income due to depreciation recapture - the opposite of what I expected! The calculation isn't intuitive at all. Here's what helped me: I gathered my original purchase documents, pulled my tax return from the year I bought the vehicle, and made a simple chart showing: - Original cost: $62,000 - Total depreciation claimed: $XX,XXX - Adjusted basis: $62,000 - depreciation = $X,XXX - Sale price: $39,000 - Gain/Loss: $39,000 - adjusted basis TurboTax should walk you through this on Form 4797, but you absolutely need to know your depreciation history first. If you're uncertain about what you claimed originally, it's worth getting help from a tax pro. I initially tried to wing it and almost made a $15,000 error in my favor that would have definitely triggered an audit.

This thread has been incredibly enlightening! I'm a tax preparer and see this confusion with clients constantly. One additional point that might help - when you're looking at your tax software and see your "taxes owed" increase after entering capital gains, try looking at the detailed tax calculation breakdown if your software provides one. What you'll often see is that your federal income tax on your regular wages stays the same, your capital gains tax shows as $0 (confirming the 0% rate), but then you'll see reductions in refundable credits like EITC or increases in things like the Net Investment Income Tax if your income crosses certain thresholds. The most common culprits I see are: 1) Loss of Earned Income Credit, 2) Reduced education credits (AOTC/Lifetime Learning), 3) Reduced Retirement Savings Contributions Credit, and 4) Changes in the taxability of Social Security benefits if you're receiving any. For future years, if you're planning to realize capital gains, try to do it strategically. You might consider realizing losses to offset gains, or timing the sales across tax years to stay under the credit phase-out thresholds. The key is understanding that even "tax-free" income still affects your overall tax picture!

This thread has been incredibly helpful! I'm in a similar situation but with a slight variation - I had about $18,000 in regular income and $15,000 in long-term capital gains from selling some inherited stock. What's really frustrating is that I thought I was being smart by waiting over a year to sell (to get the long-term treatment), but my tax software is showing I owe way more than expected. Based on all the explanations here, it sounds like my capital gains are probably pushing me out of eligibility for the Earned Income Credit entirely, even though the gains themselves aren't being taxed. I'm definitely going to look into some of the tools mentioned here to better understand the exact calculations. It's wild that something that's supposedly "tax-free" can still cost you money in lost credits. Really wish the tax system was more straightforward about this stuff! Has anyone found good strategies for managing this in future years? I still have some more inherited shares I need to sell eventually, but now I'm wondering if I should spread the sales across multiple years to stay under the credit thresholds.

This is a great question that many multi-member LLCs face! You absolutely can structure disproportionate distributions, but there are a few key things to get right. For your health insurance situation, you'll want to be careful about how you handle this tax-wise. If the LLC pays for health insurance premiums for some partners but not others, those premiums are typically treated as guaranteed payments to the covered partners (making them taxable income to those individuals). The cleaner approach might be to reimburse partners for their premiums through adjusted distributions as you mentioned. For Partner 3 redirecting funds to Partner 4, the simplest approach is usually to have the LLC make its regular distributions according to ownership percentages, then Partner 3 can gift their desired amount to Partner 4 afterward. This keeps the tax reporting straightforward. Make sure your operating agreement includes language like "distributions may be made in amounts and at times determined by majority/unanimous vote of members, regardless of ownership percentages" or similar wording that fits your decision-making structure. Most importantly, document everything! Keep written records of all member approvals for non-proportional distributions. This protects you if there are ever questions from the IRS or between partners down the road.

Just want to add another perspective on the health insurance piece - we handled this by having our LLC reimburse partners for their actual health insurance costs rather than paying the premiums directly. This way it shows up as a business expense for the LLC and reduces the taxable income allocated to all partners proportionally, rather than creating guaranteed payment income for just the insured partners. At year-end, we adjust distributions to account for these reimbursements so everyone ends up with their intended net amounts. Partners who got health insurance reimbursements receive smaller cash distributions, while others get larger ones. This approach has worked well for us and keeps the tax treatment simpler since there are no 1099s to deal with. Your operating agreement should definitely include flexible distribution language as others mentioned. We use wording that allows distributions "in such amounts and proportions as determined by unanimous consent of the members, which may differ from membership percentage interests." Having this flexibility built in from the start saves you from needing amendments later.

Based on your timeline and description, this is very likely to be a 5071C identity verification letter from the IRS. The Austin Service Center is indeed one of the main facilities that handles identity verification correspondence, and your 15-day timeframe from acceptance to letter generation is pretty typical for these cases. A few things to prepare for while you wait: 1. **Gather your documents now**: You'll likely need a government-issued photo ID (driver's license or passport), your Social Security card, and a copy of the tax return in question 2. **Check your transcript one more time**: Look for any new transaction codes that might have appeared since your last check - specifically TC 971 with Action Code 522 or 524, which would confirm identity verification requirements 3. **Consider your verification options**: Online through ID.me is usually fastest (available 24/7), but you can also verify by phone or schedule an in-person appointment at a Taxpayer Assistance Center The good news is that this process has become much more streamlined over the past couple of years. Most people who complete online verification see their refund released within 7-10 business days. While the delay is frustrating, it's become a fairly routine part of the process for many taxpayers. Don't stress too much - the letter will have very clear instructions on exactly what you need to do. Keep us updated on what you receive!

I just went through this exact same situation about 6 weeks ago! Got the USPS informed delivery notification showing a letter from Austin, spent the whole day anxious about what it could be. Turned out to be a 5071C identity verification letter, just like many others have mentioned here. Your timeline matches perfectly with what I experienced - return accepted, then about 2-3 weeks later the verification letter arrives. The Austin Service Center definitely handles a lot of these identity verification cases. Here's what I wish someone had told me before I got my letter: 1. **Download the ID.me app ahead of time** - it's usually faster than the website and has better camera functionality for taking those tricky ID photos 2. **Do it on a weekday morning if possible** - I found the system was less busy and processed faster 3. **Have a backup plan** - if online doesn't work for any reason, the phone verification is still an option (though expect longer wait times) My verification took about 20 minutes online, and my refund was released exactly 9 business days later. The waiting and anxiety beforehand was honestly worse than the actual process! Whatever the letter contains, you've got this. The IRS has really improved their verification system over the past year or two. Keep us posted on what you receive tomorrow - I'm curious to see if my prediction is right!