Based on my experience helping clients with inherited property basis determinations, I'd say your approach of using Zillow estimates and tax assessments is understandable but carries some risk, especially since you're planning to rent the property and claim depreciation. The $30,000 spread between your Zillow estimate ($425,000) and tax assessment ($395,000) is actually reasonable - about 7.5% variance, which isn't unusual for property valuations. However, the IRS prefers "best evidence" of fair market value at the date of death, and online estimates or tax assessments alone may not hold up well under scrutiny. Here's what I'd recommend as a practical compromise: Use the Zillow estimate as your baseline since it's higher and more favorable for your stepped-up basis, but strengthen your documentation significantly. Get a comparative market analysis (CMA) from a local real estate agent specifically dated to your uncle's date of death - many agents will do this for free, especially if you mention potential future business. Also, pull comparable sales data from properties that sold within 3-6 months of the death date in the same neighborhood. Document the property's condition with photos and any known issues that might affect value. This creates a defensible paper trail showing you made good-faith efforts to determine fair market value. Given the property value and your depreciation plans, consider this documentation as insurance against potential audit issues. The small cost and effort now could save significant headaches later.

I went through a very similar situation when I inherited my father's house last year. Like you, I was torn between wanting to avoid appraisal costs and ensuring I had solid documentation for the stepped-up basis. Here's what I ended up doing that worked well: I used the higher of my estimates (similar to your Zillow figure) but created a comprehensive documentation package. I got a free CMA from a local realtor who was experienced with estate properties, took extensive photos of the property's condition, and gathered sales data for 5 comparable properties that sold within 4 months of the date of death. The realtor was actually really helpful once I explained it was for establishing tax basis on an inherited property. She made sure to clearly date the analysis and document her methodology, which created a professional paper trail. One thing I learned that might help you: since you're planning to rent it out and claim depreciation, consider that your basis calculation will be scrutinized multiple times over the years through your rental property tax returns. Having solid documentation from the start gives you confidence in those ongoing filings. The combination approach (online estimate + professional CMA + comparable sales data + property photos) created what my tax preparer called a "defensible position" without the full cost of an appraisal. For a $400k+ property with rental income plans, it seemed like the right balance of thoroughness and cost-effectiveness.

Great advice in this thread! One thing I'd add - make sure you're keeping detailed records of ALL your income, not just what shows up on payment apps. I learned this lesson with my freelance work when the IRS asked for documentation during a review. Keep screenshots of payments, transaction histories, and any correspondence with buyers. Also, don't forget about potential business expenses! If you're buying props, lighting, or even specific nail polish/pedicures for your photos, those could be legitimate deductions. The key is that they have to be ordinary and necessary for your business. I'd recommend consulting with a tax professional at least once to make sure you're maximizing your deductions while staying compliant - it's usually worth the cost when you're dealing with self-employment income for the first time. Good luck with your business!

One thing I haven't seen mentioned yet is the importance of understanding your state tax obligations too! While everyone's focused on federal taxes (which is definitely priority #1), don't forget that most states also require you to report self-employment income on your state return. Some states have different thresholds or rules for small business income, and a few states don't have income tax at all. But if you're in a state like California or New York, you'll want to make sure you're compliant there too. Also, since you mentioned this is your first time with non-W2 income, I'd strongly recommend setting aside 25-30% of your earnings in a separate savings account specifically for taxes. It's better to overestimate and get a refund than to be caught short when tax time comes around. Self-employment taxes can be a shock if you're not prepared for them! The quarterly payment advice from earlier is spot on - once you hit that $1,000 threshold, the IRS really does expect those estimated payments. Missing them can result in penalties even if you pay everything when you file your return.

I'm kind of in a similar situation, maybe? I didn't file for a few years and now I'm trying to catch up. Does anyone know if I need to file for all the missing years before I can file for 2023? And also, maybe this is a silly question, but does the IRS eventually tell you if you were supposed to file but didn't?

@Andrew Pinnock You don't necessarily need to file all missing years before filing your current return - you can file them in any order. The IRS typically only requires you to file if you had income above the filing threshold for each year (which varies by year and filing status). As for your second question, the IRS usually doesn't proactively tell you that you should have filed unless they have records of income reported to them (like W-2s or 1099s) that would trigger a filing requirement. They might eventually send a notice if they detect unreported income, but this can take years. For catching up on multiple years, I'd suggest starting with the most recent year first since that's likely to have the biggest refund (if you're owed one), then work backwards. You can use prior year tax forms available on the IRS website. Just be aware that you can only claim refunds for the last 3 years - anything older than that, you lose the refund even if you were owed money.

This is such great information from everyone! I'm actually an enrolled agent who helps nonprofits with tax compliance, and I wanted to add a few practical tips for your golf tournament. First, create a simple spreadsheet to track all sponsor contributions and what they receive in return. This will be invaluable when it comes time to issue proper acknowledgment letters. Include columns for: sponsor name, amount paid, description of benefits received, fair market value of benefits, and tax-deductible portion. Second, get everything in writing with the Huntington's Disease Foundation before you start collecting money. You'll want a formal fundraising agreement that specifies how funds will be transferred, who issues tax receipts, and what documentation they'll provide to your sponsors. Third, consider setting up separate sponsorship tiers - some that are purely charitable donations (no benefits) and others that include golf/dinner packages. This makes the tax calculations much cleaner for everyone involved. The IRS Publication 526 has excellent guidance on charitable contributions that might be helpful for your sponsors to reference. Good luck with your tournament - sounds like it's going to be a great event for an important cause!

As a CPA who has worked with several charity golf tournaments, I want to emphasize something that's been touched on but bears repeating - documentation is absolutely critical for everyone's protection. One thing I always recommend to tournament organizers is creating a "sponsor packet" that includes: - A copy of the charity's IRS determination letter (proving 501c3 status) - Clear breakdown of what sponsors receive vs. their tax-deductible amount - Timeline for when they'll receive their official donation receipt - Contact information for the charity if they have questions Also, be aware that if you're handling any of the money directly (even temporarily), you may need to report it on your personal tax return and then show the subsequent donation to the charity. This is why working directly through the charity's existing systems is often simpler. One last tip: some sponsors may want to pay directly to the charity rather than through your organizing committee. Be prepared for this and have the charity's donation processing information ready. It actually makes things cleaner from a tax perspective, even though it might feel like you're losing control of the fundraising process. The tournament sounds like it's going to be amazing - the tax stuff seems complicated but it's really just about proper documentation and clear communication with all parties involved!

This is exactly the kind of question I had when I started my LLC! One thing I learned the hard way is that you absolutely need to establish legitimate job duties and pay rates BEFORE you start paying them. The IRS looks for whether this is a real employment relationship or just a way to shift income to your kids. I recommend creating written job descriptions that match what they're actually doing, setting up regular work schedules (even if it's just a few hours after school), and paying them consistently - not just random amounts when you feel like it. The phone answering and filing work you mentioned is perfect because it's clearly legitimate business tasks. Also, make sure you're familiar with child labor laws in your state. Most states have restrictions on how many hours minors can work during school periods, and you want to stay within those limits even though they're your own kids. The payroll vs. 1099 question is important - definitely go with payroll as others have mentioned. Your children working under your supervision in your business are employees, not independent contractors.

One thing I haven't seen mentioned yet is the importance of opening a separate bank account for your kids' wages. I made this mistake in year one - just transferred money from my business account to their personal accounts, and it created a documentation nightmare when I tried to prepare my taxes. Now I have my payroll service direct deposit their wages into dedicated accounts I opened for each of them (as custodial accounts since they're minors). This creates a clear paper trail that shows legitimate wage payments rather than what could look like gifts or allowances to the IRS. Also, don't forget about income tax withholding. Even though they're exempt from FICA, they may still owe federal and state income taxes depending on how much you pay them. The standard deduction for 2024 is $14,600, so if they earn less than that from all sources, they probably won't owe any income tax. But you should still have them fill out a W-4 to indicate whether they want any federal taxes withheld. My kids actually love getting their "real" paychecks with pay stubs showing their earnings and deductions (even if the deductions are zero). It's been a great way to teach them about how payroll and taxes work!