I'm dealing with something very similar right now - buying a property from a family friend's LLC at below market value. After reading through all these responses, I'm realizing this is way more complicated than I initially thought! From what I'm gathering, the key issues seem to be: 1. The LLC selling below market creates a potential gift tax situation for the owner personally 2. Mortgage lenders may have issues with the LLC structure vs individual gifts of equity 3. Documentation is absolutely critical - appraisals, business justifications, proper contracts I'm curious - for those who've been through this, did you end up structuring it as a straight sale from the LLC, or did your friend distribute the property to himself first and then sell it individually? And did anyone run into issues with their mortgage lender not accepting the arrangement? Also wondering if anyone has experience with how long the IRS gift tax reporting process takes if you do need to file Form 709. My friend is worried about potential delays or complications that might affect our closing timeline. Thanks for all the detailed responses - this thread has been incredibly helpful in understanding what we're getting into!

This is a really complex situation that touches on several areas of tax law. Based on what I've seen in practice, here are the key considerations: **Gift Tax Implications**: The LLC selling below market value will likely be treated as a gift from your friend (the LLC owner) to you for the difference. Since you mentioned a $58k discount and the annual gift exclusion is $17k per person ($34k for married couples), your friend would need to file Form 709 to report the excess against his lifetime exemption. **Documentation Requirements**: You'll absolutely need a professional appraisal to establish fair market value. This protects both of you and provides the documentation needed for tax reporting and mortgage approval. **Mortgage Lender Challenges**: Many lenders have strict guidelines about gifts of equity that assume individual-to-individual transfers. With an LLC involved, you may need to shop around for a lender willing to work with this structure. Be prepared for additional documentation requirements and potentially longer processing times. **Business Purpose**: Consider whether there are legitimate business reasons for the discount (quick sale, as-is condition, avoiding realtor fees, etc.) that could justify some portion of the reduced price. I'd strongly recommend your friend consult with both a tax professional and attorney before proceeding. The rules around related-party transactions through business entities can be tricky, and proper structuring upfront will save headaches later. Good luck with your purchase!

I'm sorry to hear about your father's medical situation. This is definitely a complex scenario given the international aspect and his residency status. One important consideration that hasn't been fully addressed is whether your father would qualify as a "qualifying relative" for tax purposes. Since he was deported and hasn't been a US resident for about 20 years, this could impact both the medical expense deduction and the penalty exemption for the 401k withdrawal. For the qualifying relative test, the IRS requires that the person either be a US citizen, resident alien, or resident of Canada or Mexico. Since your father is in Mexico, he might still qualify under the Mexico provision, but you'd need to verify he meets all the other requirements (relationship test, gross income test, support test). Also, keep in mind that even if you qualify for the medical expense exception to avoid the 10% penalty, you'll still owe regular income tax on the entire withdrawal amount. And the medical expense deduction only helps if you itemize and your total medical expenses exceed 7.5% of your AGI. Given the complexity, I'd strongly recommend consulting with a tax professional who has experience with international medical expenses and retirement withdrawals. The potential tax savings from proper planning could easily offset the consultation cost. Document everything meticulously - hospital records, payment receipts, currency conversion rates, and any correspondence about your father's care. You'll want a clear paper trail if the IRS has questions later.

I'm so sorry you're going through this difficult situation with your father. Having dealt with something similar when my aunt was hospitalized in Canada, I understand how overwhelming the financial and tax implications can be on top of the medical stress. One thing that might help is understanding the timeline requirements for hardship withdrawals. The IRS typically requires that the withdrawal be made in the same year as the medical expenses, or within a reasonable time after they're incurred. Since your father is currently hospitalized, this timing should work in your favor. Also, make sure to check if your 401k plan even allows hardship withdrawals - not all plans do, and each plan has its own specific rules about what documentation they require. Some plans have stricter requirements than what the IRS mandates. A few practical tips from my experience: - Keep detailed records of all payments, including any money transfers to Mexico - Get itemized bills from the hospital showing specific services and dates - Document the relationship between you and your father (birth certificate, etc.) - Save records of any insurance claims that were denied or not covered The loan option mentioned by others is definitely worth exploring first, as it avoids the immediate tax consequences entirely. Even if you end up needing to do a withdrawal later, having that loan option gives you more flexibility. Hang in there - the tax stuff is complicated but manageable with proper documentation and possibly professional help.

Has anyone actually calculated whether it's better to just sell RSUs immediately upon vesting rather than hold them? My financial advisor keeps telling me to diversify away from my company stock because it creates risk concentration.

I actually just went through this exact scenario a few months ago! One thing that wasn't mentioned yet is the timing consideration for year-end tax planning. If you're already facing a big tax bill this year like you mentioned, donating the RSUs before December 31st could help offset some of that income with the charitable deduction. But here's what caught me off guard - make sure your brokerage can actually transfer the shares to your chosen charity efficiently. Some brokerages make it really cumbersome and it can take weeks to process. I almost missed my year-end deadline because of transfer delays. Also, if you're planning to donate regularly, consider opening a donor-advised fund account. You can dump all your RSUs there at once, get the immediate tax deduction, then distribute to charities over time. This gives you more flexibility than direct donations to individual charities.

Has anyone mentioned the "ownership test" exception? I think there's something where if one spouse meets requirements and the other doesn't, you might still qualify. I know OP isn't talking about spouses, but there might be a similar provision for family members? Not sure tho.

One thing that might help your situation is the "step-up in basis" rule if your mom passes away while you still own the property together. I know that's not something anyone wants to think about, but it's important to understand all your options given your difficult financial situation. Also, have you considered doing a 1031 exchange? If you're buying another property immediately, you might be able to defer the capital gains entirely. The new property would need to be of equal or greater value and you'd have strict timing requirements (45 days to identify replacement property, 180 days to close), but it could completely eliminate your current tax burden. Given that you mentioned you're planning to buy a smaller place outright, this might not work since you'd need to reinvest all the proceeds, but it's worth exploring with a tax professional. Sometimes restructuring the timing of purchases can save significant tax dollars. The unemployment and health issues you mentioned should definitely qualify for the unforeseen circumstances exception. Make sure you document everything - medical records, unemployment benefits, job loss documentation, etc. The IRS is generally sympathetic to these situations when properly documented.

Has anyone used the "Schedule SE" worksheet in the tax software? I found it super helpful because it automatically calculates how much self-employment tax you owe taking into account your W-2 income. Saved me a ton of math!

This is exactly the kind of situation I went through last year! The key thing to remember is that self-employment tax is calculated on your net earnings from self-employment (after business expenses), and the Social Security portion does have that annual wage cap. For 2025, the Social Security wage base is $168,600. Since you're making $127,000 from your W-2 job, you have about $41,600 of "room" left before hitting the cap. This means only the first $41,600 of your self-employment earnings would be subject to the 12.4% Social Security portion of SE tax. However, ALL of your self-employment income will be subject to the 2.9% Medicare portion since there's no cap on Medicare taxes. Don't forget that you can deduct legitimate business expenses (computer equipment, software subscriptions, portion of home office, etc.) before calculating your SE tax. Also, you'll be able to deduct half of your self-employment tax as an adjustment to income, which helps reduce your overall tax burden. I'd definitely recommend making quarterly estimated payments if you haven't already - the underpayment penalties can be painful!