Great question! As someone who's been through a similar situation, I can confirm what others have said about the complexity of ISO taxation. One thing I'd add is to consider the timing of your exercise in relation to your company's lock-up period ending (if applicable). Many people exercise right after IPO without realizing they can't sell during the lock-up, which can create cash flow issues if AMT kicks in. Also, since you mentioned your husband has significant short-term capital losses to carry forward, you might want to explore a mixed strategy: exercise some options now and hold (to start the long-term capital gains clock), and plan to exercise additional tranches in future years when you can immediately sell to utilize those losses. One more tip - if you're planning to exercise and hold, make sure you have enough cash set aside for the potential AMT hit. I've seen too many people get caught off guard by the tax bill on "paper gains" they haven't actually realized yet. The AMT can be substantial even when you haven't sold anything. Good luck with your decision!

One additional consideration that hasn't been mentioned much here is the impact on your overall tax planning strategy for the next few years. Since you have those significant short-term capital losses carried forward, you might want to think about this as a multi-year optimization problem rather than just a single decision. Here's what I'd consider: Calculate roughly how much of those losses you could utilize each year (remember there's a $3,000 annual limit for offsetting ordinary income, but unlimited for offsetting capital gains). Then work backwards to figure out an exercise schedule that maximizes your use of those losses while minimizing AMT impact. For example, if you have $50,000 in losses carried forward, you might want to plan exercises that generate short-term capital gains over multiple years to fully utilize them, rather than trying to use them all at once. Also, don't forget about the potential for "AMT credit carryforward" - if you do pay AMT in the year you exercise ISOs, you may be able to claim that as a credit in future years when your regular tax exceeds AMT. This can help offset some of the cash flow pain of paying AMT on paper gains. The tax code is definitely complex here, but with good planning you should be able to make this work in your favor!

Quick tip from someone who's done this twice: if you're looking to maximize the 12% bracket, consider spreading the donation over multiple years. If you donate the full $68k in one year but can only use $30k due to AGI limits, you might be pushing yourself into a lower bracket in future years when using the carryforward. Sometimes it's more tax-efficient to donate portions of the land over 2-3 years (if the charity is willing). I did this by subdividing my property and donating parcels in consecutive tax years. Saved me thousands in taxes by keeping more income in the 12% bracket each year rather than having one year at super low income and then jumping to 22% bracket in later years.

One important thing to verify with your nature preserve is whether they'll provide you with a contemporaneous written acknowledgment that meets IRS requirements. For donations over $250, you need this acknowledgment that includes a description of the property donated and a statement that no goods or services were provided in exchange (or the value if any were provided). Since this is adjacent land that will be incorporated into their existing preserve, make sure they provide written confirmation that the land will be used exclusively for conservation purposes and won't be sold. This "related use" documentation can be crucial if you're ever audited, as it supports your ability to deduct the full fair market value rather than being limited to your basis. Also, don't forget that you'll need to reduce your basis in the property to zero for tax purposes once you donate it, which shouldn't be an issue given your low $675 basis. The $67,325 difference between your basis and the fair market value won't trigger any immediate tax consequences to you, but it's worth noting for your records.

One thing nobody has mentioned - there are significant differences between how attribution works for different TYPES of fringe benefits. Health insurance is handled one way, but company cars, education assistance, and group term life insurance might have different rules. For example, with health insurance, the S-Corp can still pay the premiums but they must be included in the W-2 as wages for anyone considered a 2% shareholder (including through attribution). But for something like an accountable plan for business expenses, the attribution rules apply differently. Might be worth looking at exactly which benefits you're trying to provide to make sure you're applying the right attribution rules for each specific benefit type.

This is a great discussion that really highlights how complex S-Corp attribution rules can be! I'm dealing with a similar situation in my family business and wanted to add one important consideration that might help clarify things. The key distinction here is that Section 318 attribution is automatic - it's not something you can opt out of or structure around easily. Once the attribution chain is established (father to son, then son to spouse), the daughter-in-law is treated as a 2% shareholder regardless of whether she actually owns any stock certificates. However, one thing to keep in mind is that the attribution only matters if it pushes someone over the 2% threshold. Since the father owns 100% in this case, any attribution will definitely exceed 2%, but in situations where the family member owns less, you might have different outcomes. Also worth noting - make sure to document everything properly. The IRS can be pretty strict about how fringe benefits are handled for attributed shareholders, so keeping good records of how premiums are paid and reported will save headaches later if there's ever an audit. Thanks for bringing up this topic - it's one of those areas where the rules seem straightforward but get complicated quickly in real family business situations!

Can anyone recommend good tax software that would make it easier to DIY instead of hiring someone? I've been using TurboTax but wondering if there's something better for someone with a small side business and regular W-2 job.

Just wanted to add my experience - I've been using a tax preparer with PTIN/EFIN (no CPA) for 3 years now and she's been fantastic. What matters most is finding someone who specializes in situations like yours and stays current with tax law changes. My preparer does continuing education even though she's not required to as much as a CPA would be. Before hiring anyone, ask them specific questions about your situation - like what deductions they typically find for people with your income sources, how they handle W-4 optimization, etc. A good preparer will give you detailed answers regardless of their certification level. Also ask for references from clients with similar tax situations to yours. The fact that your person is working toward CPA certification actually shows they're committed to advancing their knowledge, which is a good sign in my book.

This is exactly why I love this community - seeing everyone jump in to help decode these confusing transcripts! 💪 From what you've shared, it looks like you've been through quite the journey. That 810 freeze code from March 2023 plus the amended return (977) definitely explains why things took so long. The examination codes (420/421) show they did a thorough review but closed it in April, which is actually great news! Those credits totaling over $11k ($3,599 + $7,935) are substantial - no wonder the IRS wanted to take a closer look. With the examination closed and the refund hold removed (577 code), you're definitely in a much better position now. Keep an eye out for that 846 code everyone's mentioning - that's your golden ticket showing the refund has actually been issued with a date. Given where you are in the process, I'd expect to see movement soon. The worst part (the examination) is behind you! Stay strong - you've made it through the hardest part of this process! 🙌

This is such a relief to see someone else going through the same thing! I've been dealing with a similar situation - had a refund freeze last year and just went through an examination that finally closed a few weeks ago. Looking at your codes, you're actually in a really good spot! That 421 code showing your examination closed in April is huge - mine just closed and I can tell you the relief is real. The fact that they removed your refund hold (577) right after closing the exam is a great sign. Those credits you're seeing ($3,599 + $7,935) are legitimate and were processed back in April 2023, but the freeze kept them from being released. Now that everything's cleared, you should definitely be seeing an 846 code with a DDD (direct deposit date) soon. I know the waiting is absolutely brutal - I've been checking my transcript obsessively for months. But based on what I'm seeing here, you've cleared all the major hurdles. The IRS doesn't remove refund holds unless they're satisfied with their review. Hang in there - after almost two years of this process, you're finally at the finish line! 🤞✨