Thanks for bringing up this complex interaction between Form 8978 and AMT calculations. I've seen this exact scenario several times this year and it's definitely confusing at first glance. What you're experiencing is correct - the software is properly applying the tax law. The Form 8978 adjustment creates a credit that reduces your regular tax liability, but AMT is calculated independently using its own set of rules on Form 6251. When the regular tax (after the 8978 credit) falls below the AMT liability, the AMT kicks in as intended. One thing to double-check: make sure your client doesn't have any AMT credits from prior years that could offset this current AMT liability. Also, if this is a significant ongoing issue for your client, you might want to explore estimated payment strategies for next year to avoid underpayment penalties, since the AMT calculation might not be captured in their usual payment routine. The interaction between partnership audit adjustments and AMT has been a real headache since the centralized partnership audit regime was implemented. At least now the IRS instructions are starting to acknowledge these scenarios more clearly.

This is a great discussion on a really tricky area of tax law. I've been dealing with these Form 8978/AMT interactions more frequently lately and wanted to add a few practical tips that have helped me: First, when explaining this to clients, I find it helpful to frame it as the AMT serving as a "safety net" that prevents their total tax from going too low, even with legitimate credits. The Form 8978 credit still provides value - it's just capped by the AMT floor. Second, for planning purposes, I've started including a note in my client files when they receive partnership K-1s to flag potential future AMT issues if there are audit adjustments. This helps set expectations early. One thing I haven't seen mentioned yet is the timing aspect - if your client is facing a large AMT liability due to the 8978 adjustment, make sure to review their estimated payment requirements for the current year. The AMT can create unexpected underpayment scenarios since most clients don't factor it into their quarterly estimates. Also, if anyone is dealing with multi-year adjustments (where the 8978 affects multiple tax years), the AMT interactions can get even more complex. In those cases, I've found it's worth running scenarios for each affected year to see if there are any planning opportunities around the timing of when to file the adjusted returns.

I'm in a very similar situation and completely understand your frustration. We filed our ERC claim in August 2023 and are now at 8 months with virtually no communication from the IRS beyond that initial acknowledgment letter. What I've learned from talking to other business owners and our CPA is that the IRS is essentially treating every ERC claim like a potential audit case now. They're manually reviewing documentation, cross-referencing with PPP loans, and being extremely thorough because of all the fraudulent claims that flooded the system. The good news is that if you received that letter saying they need more time, it typically means your claim passed the initial fraud screening and is being reviewed by an actual person rather than being automatically rejected. The bad news is that this manual review process is what's causing these massive delays. I know it's incredibly stressful when you're counting on that money for business operations. We're in the same boat - made decisions based on expecting this credit and now we're scrambling with cash flow. But from everything I've heard, legitimate claims are eventually getting processed, it's just taking much longer than anyone anticipated. Hang in there!

I'm dealing with the exact same nightmare - filed our ERC claim in July 2023 and we're now at 9 months with just that one generic letter about needing more processing time. The silence since then has been absolutely maddening, especially when our business is struggling with cash flow issues. What really gets me is that there's no transparency in the process at all. With regular tax refunds, you can at least check the status online, but with ERC claims it's like throwing your paperwork into a black hole. I've called the IRS multiple times and the representatives either can't access ERC claim information or just give me the same "it's being processed" runaround. I'm starting to wonder if they're intentionally dragging this out hoping businesses will just give up or go under before they have to pay out these credits. The whole situation feels deliberately opaque, and it's incredibly frustrating when you're a legitimate small business that followed all the rules and desperately needs this money to keep operating. Has anyone found ANY reliable way to get actual information about where their claim stands in the process? I'm willing to try just about anything at this point.

Just wanted to chime in as someone who's been through this exact situation with my small construction business. Yes, you can absolutely deduct your iPhone as a business expense for your LLC! Since you're using it for legitimate business activities like customer calls, posting ads, and managing operations, the IRS considers this a valid deduction. The percentage calculation doesn't have to be overwhelming - I kept a simple log for about 3 weeks noting business vs personal usage and found I was using my phone about 75% for business. Now I deduct that percentage of both the phone cost and monthly service bills. One thing that really helped me was setting up a separate business Apple ID for work-related apps and downloads. It makes it easier to track business usage and adds another layer of documentation. Also, since you mentioned using your business credit card for the purchase - that's perfect! It creates a clean paper trail. Keep your receipts, document your usage pattern, and you should be all set. The IRS is pretty reasonable about mixed-use items like phones as long as you have a legitimate business purpose and reasonable documentation to back up your percentage.

Absolutely! Your iPhone is definitely deductible as a business expense for your LLC. Since you're using it for legitimate business activities like customer calls, posting ads, managing payroll, and photographing inventory, the IRS recognizes this as a valid business deduction. The key is determining what percentage is business vs personal use. You don't need to track every single interaction - just make a reasonable estimate based on your typical usage patterns. For a used RV dealership where you're constantly communicating with customers and managing operations, your business percentage is probably quite high. I'd recommend keeping a simple log for 2-3 weeks to establish your business usage pattern. Track things like business calls, time spent on work-related apps, posting ads, taking inventory photos, etc. Many small business owners are surprised to find they use their phones 70-80% for business once they actually document it. Since you mentioned using your business credit card for the purchase, that's perfect - it creates a clean paper trail. Remember that this deduction applies to both the initial iPhone purchase and your ongoing monthly service bills. Just multiply your total phone costs by your business use percentage. Keep good records of receipts and your usage documentation. The IRS is generally reasonable about mixed-use items like phones as long as you have legitimate business purposes and can support your percentage calculation.

I'm going through something similar right now with my grandmother's estate. Got a CP2000 notice about 8 months after she passed for a missing 1099-B from some stock sales. The amount they're claiming is around $4,300. What's been helpful for me is understanding that this is actually pretty common - the IRS systems don't automatically know when someone passes away, so these notices can keep generating for months or even years after death. The key thing I learned from my estate attorney is that your personal liability as executor is very limited as long as you acted in good faith. Since you mentioned the estate was already settled without probate, that suggests it was a smaller estate that qualified for simplified procedures. In most states, if you distributed assets to beneficiaries without knowing about this tax debt, you're protected under "good faith executor" provisions. I'd definitely recommend responding to the notice rather than ignoring it, even though it's stressful. Include a copy of the death certificate and a simple letter explaining that the estate has been closed and distributed. Most of the time, the IRS will just close these cases when they realize there are no assets left to collect from. The peace of mind from handling it properly is worth the effort, and it protects you from any potential complications down the road.

I'm dealing with a very similar situation and want to share what I've learned from my experience and research. When my uncle passed last year, we received a CP2000 notice about 10 months later for approximately $8,200 in unreported income from a 1099-MISC we never received. The most important thing to understand is that the IRS has specific procedures for deceased taxpayers, and as an executor, you have certain protections under tax law. Here's what I discovered: 1. **Personal Liability Protection**: As long as you distributed estate assets in good faith without knowledge of the tax liability, you're generally protected from personal liability under IRC Section 6901. The key word is "knowledge" - if you didn't know about this debt when you closed the estate, you're typically not personally responsible. 2. **Proper Response**: Don't ignore the notice. Respond within the timeframe specified (usually 30 days) with a letter explaining that the taxpayer is deceased, the estate has been closed and distributed, and there are no remaining assets. Include a certified copy of the death certificate. 3. **Form 56**: Consider filing Form 56 to officially notify the IRS of your role as executor and that the fiduciary relationship has ended. This creates an official record that can protect you. 4. **Documentation**: Keep records of everything - when your father passed, when the estate was distributed, when you received the CP2000, and all correspondence with the IRS. In my case, after sending the proper documentation via certified mail, the IRS placed the account in "currently not collectible" status within about 8 weeks. The peace of mind was absolutely worth taking the time to respond properly rather than hoping it would just go away. You're not alone in this - these situations are more common than you might think, and the IRS does have procedures to handle them appropriately.

Random tip from someone who's been through this - make sure your husband is taking before and after pictures of everything he fixes up! Not only is this good for sales listings, but if you ever get audited, having visual proof of the improvements made can help justify the expenses. The IRS can be picky about hobby vs business classification for flipping activities.

Great question! I went through this exact same confusion when I started my furniture flipping side business. Here's what I learned works best in TurboTax: The initial purchase price of the motorcycles/tools should definitely go under "Cost of Goods Sold" - these are your inventory items that you're buying specifically to resell. For the repair parts and materials he's purchasing to fix them up, those go under "Materials and supplies" in the expense section. This includes things like replacement parts, paint, cleaning supplies, etc. One thing that really helped me was keeping a simple spreadsheet for each item - purchase price, repair costs, selling price, and profit. This makes it super easy when you're entering everything into TurboTax and gives you great records if you ever need them. Also don't forget about other deductible expenses like gas/mileage for picking up items, any selling fees (eBay, Facebook Marketplace, etc.), and even a portion of your phone bill if he uses it for business calls. These little things add up! The key is treating this as a legitimate business from day one with good record keeping. That way there's no question about hobby vs business classification with the IRS.