I'm confused about something - if we're paying our state taxes anyway, why does it matter whether we can deduct them or not? Like we still have to pay them either way right? Sorry if this is a dumb question, I'm new to this tax stuff.

This is such an important topic that doesn't get enough attention! I've been dealing with this exact situation in Massachusetts where our state income tax plus property taxes put us way over the $10k SALT cap. One thing I'd add to the discussion is that even if the SALT cap expires as scheduled, there's no guarantee it won't come back in some form. The revenue loss from unlimited SALT deductions is significant - around $80 billion annually according to some estimates. Given federal budget pressures, I wouldn't be surprised if we see some kind of compromise, maybe a higher cap like $25k instead of unlimited deductions. For planning purposes, I'm assuming the best case scenario (full expiration) but also preparing for the possibility that some limitation remains. It's worth running projections for both scenarios, especially if you're making decisions about major purchases or timing of deductible expenses.

Based on the details provided, I think the company may be confusing Rule 144 restrictions with vesting restrictions. These are two completely different things: 1. Rule 144 restrictions only limit when and how you can SELL the shares (mainly applies to company insiders and large shareholders) 2. Vesting restrictions determine when you actually OWN the shares for tax purposes If there are no vesting restrictions (sounds like there aren't), then your wife likely owns the shares outright from day one, and the Rule 144 restrictions only prevent immediate resale. In this case, the value of the shares would be taxable income when received. The $0.001 per share valuation seems suspiciously low. Is this a startup? Has there been a recent valuation? If the company has had outside investment or other share transactions at higher prices, the IRS could potentially challenge this valuation.

I'd strongly recommend getting everything documented in writing from the company before proceeding. As others have mentioned, the confusion between Rule 144 restrictions and actual vesting/forfeiture conditions is a red flag. Here's what I'd ask the company to provide in writing: 1. **Clear documentation** of whether there are ANY conditions under which your wife could lose the shares (substantial risk of forfeiture) 2. **Their methodology** for the $0.001 valuation 3. **Written confirmation** of their position on tax treatment and the legal basis for it 4. **Timeline** for when they'll issue tax forms (1099-NEC, etc.) If they can't provide clear answers, I'd seriously consider consulting with a tax professional who specializes in equity compensation before your filing deadline. The potential tax liability of ~$40K isn't huge, but getting it wrong could result in penalties and interest. Also keep in mind that even if no taxes are due now, you'll need to track the cost basis properly for when you eventually do sell the shares. The IRS will want to see documentation of the original value and any taxes paid at grant. The fact that this is a startup with minimal valuation actually works in your favor from a tax perspective, assuming the $0.001 valuation is legitimate and supportable.

Those codes are definitely nerve-wracking after such a long wait! The 971 means they're sending you a notice explaining what they reviewed, and the 570 is just a temporary hold while they sort things out. After 9 months of processing, you're likely in the final stages. Most people with this combo see the hold release within 1-2 weeks with an 846 code and deposit date. The most common causes are stimulus payment discrepancies or small errors they can fix automatically. Keep checking your transcript daily - once you see that 846 code pop up, you'll know your refund is on the way. Hang in there, you're so close!

Hey Allen! I totally feel your pain on this one - 9 months is such a long time to wait! Those codes can be really confusing, but from what I've seen in this community, the 971/570 combo usually means you're actually getting close to the finish line. The 971 is just letting you know they're sending you a letter explaining any changes, and the 570 is a temporary hold while they wrap up their review. Most people I've seen with these codes after long processing delays get their refund within 2-3 weeks once the codes appear. It's often something simple like a stimulus payment discrepancy that they can fix on their end. Keep checking your transcript for that 846 code - that's when you'll know your deposit date is coming! After waiting 9 months, you definitely deserve some good news soon 🤞

I had the exact same "Action Required" message show up on my 2024 transcript last week! Really freaked me out at first because of that exclamation mark, but after doing some research and talking to a tax pro friend, it seems like this is just their new way of saying "we're processing your return and might need to verify some stuff." From what I understand, the IRS is being extra cautious this year with identity verification and certain credits (like EITC, CTC, etc.). The 714 timestamp you mentioned is pretty standard - that's usually when their system updates overnight. I'm in week 2 of waiting and haven't received any mail notice yet. My "Where's My Refund" tool still just says "being processed" but at least the transcript shows they received it. Trying not to stress about it since everyone here seems to say it usually works out fine. @Bruno that's solid advice about checking mail daily - definitely don't want to miss an actual notice if one comes!

I got the same exact message on my 2024 transcript! The "Action Required" wording definitely caught me off guard too, but after reading through all these responses I'm feeling a lot more confident that it's just standard processing stuff. What's helping me stay calm is remembering that if they actually NEEDED something from me right now, they would have been way more specific about what to do. The fact that the message basically says "we'll contact you IF we need something" tells me they're still working through their review process. I filed about 10 days ago and have been obsessively checking my transcript daily (probably not helping my stress levels lol). But seeing that other people are in the same boat and that some folks from last year never even got a follow-up notice is reassuring. Going to try to stop checking every day and just focus on watching my mail for the next few weeks. Thanks everyone for sharing your experiences - this community is such a lifesaver during tax season! 🙏

This has been such an incredibly thorough discussion! As someone who handles corporate tax compliance for several clients, I'm bookmarking this entire thread. The evolution from the basic question about deductibility to covering tax-on-tax effects, multi-state complications, credit interactions, and even FIN 48 considerations is exactly the kind of comprehensive analysis that's hard to find elsewhere. What really strikes me is how interconnected all these issues are. You can't just look at deferred taxes in isolation - you have to consider the state tax implications, the interaction with uncertain tax positions, the quarterly reporting requirements, and even future business changes. It's a perfect example of why corporate tax accounting requires such careful documentation and analysis. For anyone still working through similar deferred tax issues, I'd suggest creating a detailed checklist that covers all the points raised here: verify you're using the correct blended rate calculation, document your assumptions about future rate changes, ensure consistency with FIN 48 positions, and maintain detailed support for your quarterly rollforward calculations. The upfront work is significant, but it prevents the kind of prior period correction headaches that several people mentioned. Thanks to everyone who contributed their expertise here - this is the kind of collaborative problem-solving that makes these professional communities so valuable!

This has been an absolutely fantastic deep dive into deferred tax complexities! As someone who works with multi-state corporate clients, I can't emphasize enough how valuable this discussion has been. I wanted to add one more consideration that hasn't been mentioned yet: the impact of SALT cap limitations on your deferred tax calculations. With the $10,000 cap on state and local tax deductions for federal purposes, some companies are finding that their traditional assumption about state taxes being federally deductible isn't always holding true anymore. If your company is hitting the SALT cap, the deductibility of additional state taxes becomes more complicated, which can affect how you calculate the tax-on-tax adjustment in your blended rate. For companies with significant state tax liabilities, this could materially impact the effective rate used in deferred tax calculations. We've started including SALT cap projections in our deferred tax rate calculations for clients where this could be a factor. It adds another layer of complexity, but it's necessary for accuracy given the current tax environment. Also, for anyone dealing with these complex deferred tax issues regularly, I'd recommend developing a standardized documentation template that captures all the decision points discussed here - from rate calculations to FIN 48 interactions to quarterly rollforward support. Having consistent documentation makes audits much smoother and helps ensure year-over-year consistency in your approach. Thanks again to everyone for sharing such detailed insights - this is exactly the kind of collaborative learning that helps us all stay current with evolving tax complexities!