This is exactly the kind of question that trips up so many business owners! The key difference is that S corps and C corps have opposite reasonable compensation concerns from the IRS perspective. With your S corp, you're absolutely right to be careful about maintaining adequate salary vs distributions. The IRS wants to see reasonable compensation because S corp distributions aren't subject to payroll taxes, so they're watching for owners who try to minimize salary to avoid Social Security and Medicare taxes. But here's where it gets interesting with C corps - the IRS actually worries about the opposite problem. Since C corp salaries are deductible at the corporate level (reducing corporate taxable income) while dividends face double taxation, the IRS is more concerned about unreasonably HIGH compensation in C corps. Owner-employees have an incentive to take excessive salaries to avoid the corporate tax, so that's what triggers IRS scrutiny. You technically could take minimal salary and maximum dividends from a C corp, but the double taxation on dividends usually makes this a poor strategy from a total tax perspective. Plus, if you're actively working in the business, the IRS still expects some reasonable compensation for your services - just like any other employee performing similar work would receive. The "reasonableness" test considers factors like your role, industry standards, time commitment, qualifications, and company performance - regardless of entity type.

One thing that often gets overlooked in this S corp vs C corp compensation discussion is the impact of your long-term business goals. If you're planning to reinvest profits back into the business for growth, a C corp structure might actually work better even with the double taxation concern. Here's why: With an S corp, all profits flow through to your personal return whether you take distributions or not - meaning you pay personal income tax on retained earnings. With a C corp, you only pay the 21% corporate rate on retained profits, which could be lower than your personal rate if you're in higher tax brackets. So while the reasonable compensation rules do flip between entity types (S corps worry about too little salary, C corps about too much), your decision should factor in your overall business strategy. If you're taking most profits out annually, S corp probably still wins. But if you're planning to keep significant profits in the business for expansion, equipment purchases, or building cash reserves, the C corp might be worth considering despite the compensation complexity. The reasonable compensation requirements exist in both structures - they just point in opposite directions based on the underlying tax incentives each entity type creates.

Don't panic! This is way more common than you think - I went through the exact same thing last year and it all worked out fine. First thing to do is check if your employer has an online portal (like ADP or Workday) where you can download your W-2 electronically. Most companies do this now and it's the fastest solution. If not, just call or email your HR/payroll department - they can usually get you a new copy within a day or two. I was stressing about this too but it turned out to be super straightforward. As a backup plan, you can always file Form 4852 (substitute W-2) using your last paystub from December, which should have all your year-to-date totals. The IRS is totally fine with this when you can't get your actual W-2. Also, pro tip for keeping track of important documents - I now scan everything important to Google Drive right when I get it. No more panic cleaning sessions ruining my taxes! You've got this!

Hey Eva! Take a deep breath - you're definitely not screwed and this is SO much more common than you think. I work in tax prep and we see this situation literally dozens of times every tax season. Here's your game plan: 1. Check if your employer has an online employee portal (ADP, Paychex, Workday, etc.) - you might be able to download your W-2 right now! 2. If not, contact your HR/payroll department ASAP. Most can email or print a new copy within 24-48 hours. 3. If your employer is unresponsive, you can request a wage transcript from the IRS by calling 1-800-908-9946 (this line is specifically for wage transcripts and usually has shorter wait times than the main number). And honestly? Your "disaster zone apartment" comment made me laugh because I literally did the exact same thing two years ago - lost my W-2 in a pre-visit cleaning frenzy for my parents. You're in good company! The most important thing is don't wait - start with option 1 or 2 today. You have plenty of time before the filing deadline, and this will be resolved way faster than you think. Adult life is mostly just figuring out systems to prevent exactly this kind of panic (speaking from experience 😅).

One additional consideration that hasn't been mentioned yet - if your LLC units are subject to vesting and the company hasn't sold yet, make sure you understand what happens if you leave the company before the liquidity event. Many LLC operating agreements have "bad leaver" provisions that could affect your tax treatment or even result in forfeiture of unvested units. Also, since you mentioned the units only vest upon sale or IPO, you'll want to confirm whether there are any interim valuation events that could trigger partial vesting or affect your basis calculation. Some agreements have provisions for secondary sales or tender offers that could complicate the tax picture. The 83(b) election protects you from ordinary income treatment at vesting, but it doesn't necessarily protect against forfeiture provisions in your grant agreement. Worth reviewing those terms with both a tax professional and potentially an employment attorney if there are significant amounts at stake.

This is a really comprehensive discussion! One aspect I'd add that might be relevant to your situation - make sure you understand how the LLC's depreciation recapture (if any) might affect your sale. Even though you filed an 83(b) election, if the LLC has been taking depreciation deductions on assets over the years, some portion of your gain could be subject to depreciation recapture at ordinary income rates rather than capital gains rates. This is separate from the Section 751 "hot assets" issue that was mentioned earlier, but can similarly convert what you expect to be capital gains into ordinary income. The LLC should provide this information when the sale occurs, but it's worth asking about proactively so there are no surprises. Also, given that you've held these for 9 years, you might want to consider whether any tax-loss harvesting opportunities in your portfolio could help offset the capital gains when you do sell. Since this sounds like it could be a significant gain, having a tax planning strategy in place before the sale completes could save you quite a bit in taxes.

Just wanted to share that depending on your total tax debt amount, another option is to request what's called a "tiered" installment agreement from the IRS. I had a similar situation last year, and the IRS set me up with a plan where I paid a higher amount for the first 12 months to clear the newer tax debt, then my payment dropped down to the original amount for the remainder of the older debt. The benefit was that it looked like one continuous agreement rather than a defaulted one that got modified. Might be worth asking about when you call!

I actually work as a tax professional and deal with these situations regularly. The confusion you encountered is unfortunately very common because the IRS has different procedures depending on when you call and which department you reach. Here's what's really happening: The IRS system is designed to automatically flag installment agreements as defaulted when new tax debt posts to your account. However, there's a difference between a "systemic default" (which happens automatically) and an "administrative default" (which results in collection actions). The key is calling within 30 days of when the new assessment posts. During this window, you can request what's called a "modification" rather than starting a completely new agreement. This keeps your payment history intact and avoids the more serious consequences of a true default. My advice: File your 2022 return ASAP, then monitor your online IRS account transcript. The moment you see the new balance assessment appear, call immediately to request the modification. Be specific that you want to "modify your existing installment agreement to include the new tax year" rather than saying you want to "restart" or "set up a new" agreement. The exact wording matters with IRS representatives.

One thing everyone forgot to mention - if you decide to depreciate rather than using Section 179, and your business has a bad year or closes before the depreciation period ends, you can't just deduct the remaining value all at once. Something to consider if your business fluctuates a lot! This happened to my friend's videography business and he lost out on thousands in potential deductions.

Great question! Yes, you can absolutely deduct equipment purchases made with loan funds. The IRS doesn't care where the money came from - what matters is that it's a legitimate business expense. A few key points for your photography LLC: 1. **Section 179 vs Depreciation**: For $12,500 in equipment, you'll likely want to use Section 179 to deduct the full amount in the first year rather than depreciating over time. Much simpler and gives you the tax benefit immediately. 2. **Documentation**: Keep clear records linking the loan to the equipment purchases. Save receipts, invoices, and loan documents showing the funds were used for business purposes. 3. **Don't forget loan interest**: While the loan principal isn't deductible, the interest you pay on that business loan is a separate deductible expense throughout the life of the loan. 4. **Mixed-use equipment**: If any equipment might be used personally (like a camera you occasionally use for family photos), you can only deduct the business percentage. Since you're an LLC, you'll handle this on Schedule C of your personal return (assuming single-member LLC). The deduction will reduce your taxable business income, which flows through to your personal taxes. Definitely worth consulting a tax pro for your specific situation, but the basic principle is solid - loan-funded business expenses are still deductible business expenses!