I used TurboTax last year for my rental property sale and it was decent. It asked all the right questions about depreciation and guided me through the process, but I still felt like I needed to double-check everything. The interface for entering improvement costs was particularly clunky. If your situation is pretty straightforward, TurboTax can handle it. But if you have lots of improvements or a complicated ownership history, might be worth paying a CPA for at least a review.

Wow, I completely forgot about the NIIT! That's a really important point. So if I understand correctly, with our $83k regular income plus the $255k capital gain, we'd have $338k total income, which means we'd owe the 3.8% NIIT on $88k (the amount over $250k). This is getting pretty complicated with all the different tax layers. Between the regular capital gains tax (~$31,500), depreciation recapture (~$11,250), and now NIIT (~$3,340), we're looking at close to $46k in federal taxes alone. And we're in California, so there will be state taxes on top of that. I think I definitely need to consult with a tax professional at this point. This is way more complex than I initially thought!

I'm in the exact same boat as you! Just found the 970 code on my transcript 3 days ago and have been frantically searching for answers. This thread has been a lifesaver - I had no idea this was so common! Like you, I've been obsessively checking my transcript multiple times a day, but after reading everyone's experiences here, I'm convinced that patience is really the key. It seems like the pattern is: 970 code appears → wait 2-3 weeks → letter arrives explaining what they need → quick resolution once you respond. I'm going to follow the advice here and limit myself to checking once a week. The waiting is brutal, but it sounds like we're both likely looking at resolution within the next few weeks. Thanks for posting - it's really comforting to know there are others going through this exact same situation right now!

I've been using Wealthfront for about 2 years and their tax-loss harvesting has been pretty good at avoiding wash sales by using similar but not "substantially identical" securities. For example, they might sell a Vanguard S&P 500 ETF at a loss and buy an iShares S&P 500 ETF that performs similarly but isn't identical in the IRS's eyes. Just be careful if you're trading similar securities in other accounts they don't manage - that can still trigger wash sales they can't prevent.

This is really helpful, thank you! I think I might be in exactly this situation where I'm still holding some replacement shares without realizing it. When you say "partial sales" - do you mean if I sold part of my position but kept some shares? Because I definitely did that with a few stocks. Would those remaining shares prevent me from claiming the losses on the portions I did sell?

Yes, exactly! If you sold part of your position but kept some shares, those remaining shares are considered "replacement shares" for wash sale purposes. This means the losses on the shares you sold cannot be claimed if you're still holding any portion of the same stock within that 30-day window. For example, if you sold 100 shares of XYZ at a loss and then bought back 50 shares within 30 days (or were already holding some), the entire loss on those 100 shares gets disallowed and added to the basis of the 50 shares you're holding. To actually claim those losses, you'd need to sell ALL of your XYZ shares and wait at least 31 days before buying back in. This is one of the trickiest parts of wash sale rules that catches a lot of people off guard!

14 Do you think this situation warrants hiring a tax professional to handle it? I've always done our partnership returns myself, but this mistake has me worried I'm in over my head now.

9 For just a missing Schedule B-2, hiring a professional specifically for this issue is probably unnecessary unless the schedule contains complex information that affects the substance of your return. This is a fairly straightforward fix that you can handle yourself with the advice already provided. However, if your partnership is growing in complexity or you're finding the annual filing requirements increasingly challenging, it might be worth consulting with a tax professional for future returns. Partnership taxation has become significantly more complex in recent years with additional reporting requirements and potential penalties.

17 Did they still process your K-1s in time? My partners are already asking when they'll get their K-1 information for their personal returns, and I'm worried this mistake will delay everything.

The K-1s were processed and available to partners on schedule, even though the main return was held up waiting for the missing schedule. The IRS seems to separate the K-1 processing from the main return processing when they're waiting for additional information. My partners were able to get their K-1s and file their personal returns without any delays, which was a relief. The missing schedule only affected the partnership return itself, not the individual partner reporting.

Thanks for the suggestion! Do you know if the CCH tool covers the edge cases like remote employees vs independent contractors and how they affect nexus? Also, any idea on pricing for a small-medium business?

The CCH tool definitely covers the distinction between remote employees and independent contractors for nexus purposes. It breaks down each state's position on various business activities - whether having remote workers creates nexus, what types of solicitation activities are protected under P.L. 86-272, and factor presence thresholds for economic nexus. Pricing is unfortunately on the high side for small businesses - typically around $2,500-3,000 annually for the state tax module. If that's beyond your budget, you might consider bringing in a regional CPA firm with multi-state expertise for a one-time nexus study. They often have access to these resources and can provide you with a comprehensive analysis for less than buying the tools yourself.

How do the voluntary disclosure agreements work? We probably should have been filing in some states for the past couple years but haven't been.

Voluntary Disclosure Agreements (VDAs) are essentially deals you can make with states where you come forward voluntarily to register and pay back taxes before they audit you. Most states offer some form of VDA program because it's easier for them than tracking down non-compliant businesses. The typical benefits include: limiting the lookback period (usually 3-4 years instead of the full statute of limitations), waiving penalties (though you'll still owe interest), and sometimes reducing the interest rate. You have to be "clean" when you apply - meaning the state can't already be investigating you or have contacted you about the tax. The process usually involves submitting an anonymous pre-application where you describe your business activities without identifying yourself. The state reviews it and tells you what relief they're willing to offer. If you accept, you then formally identify yourself and enter into the agreement. I'd definitely recommend working with a tax attorney or experienced CPA for VDAs since there are strict procedures and deadlines. Also, some states require you to register for all taxes at once (income, sales, payroll) so you need to understand the full compliance picture before applying.