One thing that hasn't been mentioned yet is the importance of understanding how partnership distributions affect your basis calculation. I learned this the hard way when I received a large distribution from one of my real estate partnerships last year. When you receive distributions from the partnership, they reduce your tax basis but don't necessarily change your capital account. If your distributions exceed your basis, you could have immediate taxable gain even if the partnership itself is profitable and your capital account is positive. This is another reason why tracking your actual basis (not just relying on the capital account) is so important. I almost missed a taxable distribution because I was only looking at my capital account balance on the K-1, which showed I still had plenty of "equity" in the partnership. Your partnership agreement should specify how distributions are allocated and whether they're considered returns of capital or something else. Make sure you understand this before you receive any large distributions, especially if you're planning to take money out for other investments.

Great question about tracking basis during the year for distribution planning! I've found a few approaches that work well: 1. **Quarterly basis estimates**: I created a simple spreadsheet that tracks my beginning basis, then adds/subtracts items as they occur during the year. I add my estimated share of partnership income (based on monthly/quarterly reports from the partnership) and subtract any distributions I receive. 2. **Partnership reporting**: Better-managed partnerships will often provide quarterly or semi-annual statements that include estimated basis calculations for each partner. If your partnership doesn't do this, it might be worth asking them to start - especially for partnerships with active distribution policies. 3. **Conservative cushion approach**: Since distributions that exceed basis create immediate taxable gain, I always assume my basis is lower than my rough calculations suggest. I try to keep a cushion of at least 20-30% of any planned distributions in my estimated basis before taking money out. The key is getting regular financial reports from your partnership so you can estimate current year income/losses. Most real estate partnerships should be providing at least quarterly updates on property performance, which you can use to estimate your share of partnership income for basis calculations. It's definitely not perfect, but it beats the surprise of finding out in March that your December distribution created taxable income!

just make sure u keep checking ur mail. i verified my identity online in May and thought i was good to go, but then they mailed me ANOTHER form to fill out two weeks later. the IRS is notorious for not communicating between departments.

I went through identity verification last month and it took exactly 6 weeks to get my refund, so definitely faster than the 9 weeks they quoted. The Where's My Refund tool updated after about 3 weeks showing "still processing" and then suddenly switched to "refund approved" one day. Definitely get that IP PIN - it's super easy to set up and gives you peace of mind. I wish I had done it years ago. The whole verification process is stressful enough without worrying about someone else filing under your SSN. One thing I learned is that the 9 weeks is their worst-case scenario timeframe. Most people seem to get their refunds within 4-6 weeks if there are no other issues with their return. Just be patient and don't stress too much about calling - the confirmation screen you got means everything went through properly.

As someone who's dealt with similar Schedule C loss concerns, I want to emphasize that the IRS hobby loss rule is really about demonstrating genuine business intent rather than just hitting specific profit targets. The fact that you paused operations in 2023 due to your partner's illness actually works in your favor - it shows you made rational business decisions rather than blindly continuing to generate losses. A few key points for your Colorado restart: 1. **Documentation is everything** - Keep detailed records of your business activities, not just expenses. Time logs, client communications, market research, networking events all help prove business intent. 2. **The 5-year window is flexible** - Since you had legitimate business reasons for the pause, and you're essentially restarting with new equipment and location, you have a strong case that this demonstrates serious business commitment. 3. **Depreciation strategy matters** - While depreciation does count toward your loss calculation, bonus depreciation on legitimate business equipment actually supports your case for having a real business with substantial investment. 4. **Consider professional consultation** - Given that you're in year 3 with a restart, it might be worth having a tax professional review your specific situation to ensure you're positioning everything correctly for IRS scrutiny. The key is showing this is a legitimate business venture, not a tax-loss hobby. Your equipment investment and strategic restart suggest you're on the right track!

Clay, I've been following this thread and wanted to add some practical perspective from someone who went through an IRS audit specifically related to Schedule C losses and the hobby rule. First, yes - depreciation absolutely counts when determining profit/loss for the 2-of-5 year rule. However, the IRS isn't just mechanically applying this test. They're looking at the totality of circumstances to determine if you have a genuine profit motive. Your situation actually has several positive factors: 1) You made a rational business decision to pause operations in 2023 due to your partner's illness (this shows business judgment, not hobby behavior), 2) You're making a substantial equipment investment ($14k shows serious commitment), and 3) You're strategically relocating and restarting (again, shows business planning). Here's what I learned from my audit experience: Keep contemporaneous records of everything business-related. Don't just track expenses - document your business activities, decision-making process, market research, and efforts to improve profitability. The IRS agent specifically asked about my business plan and whether I had adjusted my approach based on prior losses. For your equipment depreciation, taking bonus depreciation can actually strengthen your case because it demonstrates significant business investment. Just make sure you can justify the business necessity of the equipment. Since you're essentially restarting in Colorado, this could be a good time to formalize your business structure (LLC, etc.) and create a detailed business plan showing how you'll achieve profitability within 2-3 years. The IRS gives more credibility to businesses that show they've learned from past losses and adjusted their approach accordingly. Bottom line: Document your business intent thoroughly, and you should be fine even with continued losses in the short term.

I went through this exact same situation last year with my Shareworks ESPP account! The key thing that helped me figure it out was looking at my actual account statements more carefully. In the fine print of my quarterly statements, I found language that specifically mentioned "Morgan Stanley Smith Barney LLC" as the custodian, which is clearly a US entity. Even though the mailing address and some correspondence showed Canadian addresses, the actual legal entity holding my shares was US-based. You can also check your account opening documents or look in the "Important Disclosures" section of your online account. There should be clear language about which Morgan Stanley entity is your account custodian. If it says something like "Morgan Stanley Smith Barney LLC" or another US LLC/Corp designation, you're dealing with a US account and no FBAR required. If you're still not 100% sure after checking these documents, definitely call their customer service line and ask them directly to confirm which legal entity is the custodian of your account. They should be able to give you a definitive answer. Better to spend 20 minutes on the phone than worry about potential FBAR penalties!

I've been dealing with this exact Shareworks/FBAR question for months and finally got clarity from my CPA. The bottom line is that most Shareworks ESPP accounts maintained through Morgan Stanley are actually US accounts, even with the Canadian address confusion. Here's what I learned: When Solium was acquired by Morgan Stanley, most existing US participant accounts were transferred to Morgan Stanley Smith Barney LLC, which is a US entity. However, some accounts might still be held by Morgan Stanley Canada depending on when your account was established and your company's specific arrangement. The easiest way to determine this is to log into your Shareworks account online and look for the "Account Details" or "Legal Information" section. It should clearly state which Morgan Stanley entity is the custodian. If it shows any US LLC or Corp designation, you're dealing with a domestic account and no FBAR is required. One thing to be careful about - even if you determine no FBAR is needed now, keep monitoring this if Morgan Stanley makes any changes to how they hold accounts in the future. Corporate restructuring can sometimes change the legal status of where accounts are maintained. Also worth noting: the $10,000 FBAR threshold is based on the highest balance at any point during the year, not just year-end balance. So if your account briefly hit $10,001 in March but was back down to $8,000 by December, you'd still need to file if it were indeed a foreign account.

Don't forget that your 1098-T might not show the correct amount for AOTC purposes! Many schools report tuition billed in Box 2 rather than tuition paid in Box 1. For AOTC, you need to claim based on amounts paid in 2022, not amounts billed. So if you paid spring 2022 tuition in December 2021, that technically wouldn't count for 2022's AOTC calculation. Similarly, if you prepaid some 2023 expenses in December 2022, those would count for 2022 taxes.

As someone who went through this exact situation, I can confirm you're eligible for the AOTC! Since you were enrolled as an undergraduate for the first part of 2022 and completed your degree within the traditional 4-year timeframe, you definitely qualify. The key thing to remember is that the AOTC is based on your status at the beginning of the tax year and during qualified enrollment periods. Your spring 2022 semester counts as undergraduate education, so those expenses are AOTC-eligible. Make sure you keep your records straight - only include expenses from your undergraduate program (tuition, required fees, and course materials from January-May 2022) when calculating the AOTC. Your graduate school expenses from August onward would only qualify for the Lifetime Learning Credit, but since you can only claim one education credit per student per year, you'll want to calculate which option gives you the better benefit. In most cases, the AOTC's higher credit amount ($2,500 vs $2,000) and partial refundability makes it the better choice. Good luck with your taxes!