Another thing to consider - if you're talking to banks for business loans specifically (not personal loans), they actually might want to see different numbers. When I applied for a small business loan, they wanted to see my business's total revenue (the total income line) AND the profit (ordinary business income). They used the revenue to gauge business size and the profit to assess profitability. Just something to keep in mind depending on what you're using these numbers for!

I just want to point out something that confused me at first - there's also the "gross receipts" line on the 1120-S which is different from both total income and ordinary business income. Gross receipts is literally ALL money coming in before ANY deductions, total income is after some adjustments, and ordinary business income is after most expenses. The IRS publication 542 explains this, but honestly it's super confusing to read. My accountant explained it like this: gross receipts = all money in, total income = money after cost of goods sold and a few other things, ordinary business income = your actual profit after regular business expenses.

One thing nobody's mentioned - if you're giving this money specifically for education, you could pay his student loans directly or contribute to a 529 plan. Payments made directly to educational institutions for tuition bypass gift tax rules entirely!

Just wanted to add another perspective on timing - if you're concerned about the paperwork but still want to give the full amount now, remember that Form 709 isn't due until April 15th of the year following the gift (so April 2026 for a 2025 gift). This gives you plenty of time to get familiar with the form and maybe consult with a tax professional if needed. Also, don't let the gift tax form intimidate you - it's actually pretty straightforward for a simple cash gift like yours. The IRS instructions are clearer than most other tax forms, and there are good examples included. You're doing a wonderful thing helping balance things out between your kids!

My accountant told me that the proper treatment depends on your relationship with the partnership. Are you a general partner? Limited partner? Just an employee who gets a K1 for some reason? The rules are different for each situation. If you're a limited partner, royalties are almost always reported in Box 11 and not subject to SE tax. But general partners often have different treatment. Maybe show your employer this article I found helpful: https://www.thetaxadviser.com/issues/2017/jun/determining-self-employment-income-partners-partnerships.html

This is a common issue I've seen with K-1 reporting, and you're absolutely right to question it. The key is understanding the nature of your royalty payments and your role in the partnership. From what you've described, if these are truly passive royalties from intellectual property you created in the past but are no longer actively developing, they should NOT be subject to self-employment tax. The proper reporting would typically be Box 11 with code F for royalties, not as guaranteed payments in Box 4a or self-employment earnings in Box 14A. However, I'd recommend getting a definitive answer by reviewing your partnership agreement and the specific terms of your royalty arrangement. The classification can depend on whether you're considered to be receiving these payments for past services, current services, or simply as a return on capital (your intellectual property). You might want to request a meeting with your employer's accounting department and bring documentation showing the nature of your royalty agreement. If they're unwilling to correct it, consider getting a second opinion from a tax professional who specializes in partnership taxation, as the SE tax implications can be significant over time.

Just a real life example: I didn't properly report my cash tips for 2 years and got absolutely hammered in an audit. The IRS calculated my "expected tips" based on the restaurant's sales records and my shifts. Ended up owing over $4,300 in back taxes plus penalties. Not worth the risk! Just track everything and report properly.

As someone who's been serving for about 5 years, I'll add that it's really important to understand the difference between "reported tips" and "allocated tips" on your W-2. If your reported tips are less than 8% of your sales, your employer might add "allocated tips" to make up the difference. These allocated tips show up on your W-2 but don't have taxes withheld from them, which can create a surprise tax bill. Also, keep in mind that if you work at a large restaurant (11+ employees), they're required to report total tip income to the IRS, so there's already a paper trail of what the restaurant's servers are making collectively. This makes underreporting much riskier than people think. My advice: track everything daily, report it all to your employer monthly, and if you're worried about owing taxes at the end of the year, consider having extra money withheld from your paycheck or making quarterly estimated payments. Better safe than sorry!

I went through this exact same situation last year and can confirm that everyone's advice about using Code "B" is spot on. What really helped me was creating a simple spreadsheet to track all my transactions before transferring them to Form 8949 - it made the whole process much less overwhelming. One thing I'd add is to keep copies of all your brokerage statements and trade confirmations, even after you file. The IRS occasionally asks for documentation to support the cost basis information you're reporting, especially when it wasn't reported by your broker. Having everything organized made it easy when I got a letter asking for clarification on a few transactions. Also, if you're doing multiple forms (like if you have both short-term and long-term transactions), make sure you're using the right boxes at the top. It sounds like you've got this figured out with Box B for short-term unreported basis, but it's easy to mix them up when you're dealing with multiple forms. The whole process gets much easier once you do it the first time - I was stressed about it last year but this year it took me maybe 30 minutes to complete all my 8949 forms. You've got this!

I just wanted to chime in as someone who's been through this exact scenario multiple times. Code "B" is absolutely the right choice for your situation - when your 1099-B shows that cost basis wasn't reported to the IRS, that's exactly what Code "B" is designed for. One thing that might help ease your mind: this is actually a very common situation, especially with certain brokers who don't report cost basis for all types of transactions. The IRS is completely used to seeing Code "B" on Form 8949, and as long as you have your purchase records to support the cost basis you're reporting, you're in good shape. I'd also recommend double-checking your math before submitting - make sure the gain/loss you calculate by subtracting your cost basis (column e) from the proceeds (column d) makes sense based on what you remember about those trades. It's an easy way to catch any data entry errors before filing. You're doing everything correctly by selecting Box B at the top and using Code "B" for each transaction. Don't let the complexity of the instructions psych you out - your situation is straightforward and you've got all the information you need to file accurately.