I went through something very similar last year when my grandmother in Italy gave me $25,000 for my wedding. I was completely overwhelmed by all the different forms and requirements! Here's what I learned: Since your aunt is in Spain (not a US person), you're dealing with foreign gift reporting rules. The good news is that as the recipient, you won't owe any taxes on the gift itself - gifts are never taxable income to the person receiving them. For reporting, you'd only need to file Form 3520 if the total gifts from foreign persons exceed $100,000 in a tax year (for 2024). Since your gift is $28,000, you're well below that threshold, so no Form 3520 required. However, I'd definitely recommend keeping detailed records: get a gift letter from your aunt (doesn't need to be fancy - just stating it's a gift with no repayment expected), keep all wire transfer documentation, and maybe even save some emails or texts about the gift. I learned this the hard way when my tax preparer asked for documentation I almost didn't have! The fact that your aunt already paid taxes in Spain doesn't affect your US tax situation - there's no double taxation issue here since you're not paying any US taxes on the gift anyway.

I've been following this thread and wanted to share my experience as well. I received a $35,000 gift from my uncle in Canada last year and was in a similar panic about reporting requirements. After doing extensive research and consulting with a tax professional, here's what I learned that might help: Even though Canada is a different country than Spain, the same basic principles apply. Since your aunt is not a US person, you're looking at the foreign gift reporting rules, and as others have mentioned, the $100,000 threshold for Form 3520 means you don't need to file anything. One thing I want to emphasize that hasn't been mentioned enough - make sure you understand the difference between a "gift" and other types of transfers. The IRS can be suspicious of large foreign transfers, especially if they can't clearly establish it was truly a gift versus payment for services, loan proceeds, or income. Having that gift letter and family relationship documentation becomes crucial if questions ever arise. Also, don't forget that if you have any foreign bank accounts where this money was held (even temporarily), you might have FBAR reporting requirements if your foreign account balances exceed $10,000 at any point during the year. This is completely separate from the gift reporting rules but something to keep in mind!

Based on your transcript, the timing actually looks pretty normal for a post-freeze refund situation. The key thing to understand is that even though your freeze (810) was removed on March 30th, your return didn't actually get processed until April 3rd - that's when the real clock starts ticking for refund issuance. The 971 notice code from April 3rd is standard procedure when there's been any kind of account hold. You'll probably receive that letter in the mail explaining what happened, but since the freeze is already resolved, it's more of a "for your records" thing. Your withholding date of April 15th on the transcript is just a system date - it doesn't mean you need to wait until then. The IRS typically issues refunds 1-3 weeks after the processing date (April 3rd in your case), so you should see your $316 hit your account sometime between now and early May. If nothing shows up by May 10th, that's when I'd start making calls. But honestly, your transcript looks clean with no error codes or additional holds, so you should be good to go!

I went through something very similar last year! Had a 810 freeze code that got removed with 811, and like you I was constantly checking my transcript trying to figure out what was happening. The waiting is absolutely nerve-wracking when you're expecting money. From my experience, the timeline others have mentioned sounds about right - I got my refund about 10 days after my return processing date, not from when the freeze was removed. The 971 notice I received just explained that they had temporarily held my refund for "additional review" but everything was resolved. One thing that helped me was setting up direct deposit alerts with my bank so I'd know immediately when anything hit my account. The IRS doesn't always update their tools right away, but the money usually shows up first. Hang in there - your transcript really does look like everything is moving in the right direction! 💪

Just a quick accounting perspective - when you're recording those free assets, make sure you're following proper accounting principles. The journal entry should be: Dr. Fixed Assets (various) $65,000 Cr. Additional Paid-in Capital $65,000 And for the inventory purchased with the loan: Dr. Inventory $275,000 Cr. Due to Shareholder $275,000 This keeps the loan and the contributed assets separate, which will be important for tracking purposes. When you convert to S-Corp, having clean books will make the transition much smoother.

Great question about the accounting entries! For basic bookkeeping purposes, those journal entries are correct and sufficient to get you started. However, you're absolutely right that tracking book-tax differences properly can get more complex. Many small businesses use what's called a "tax provision worksheet" or maintain separate depreciation schedules rather than cluttering up their general ledger with contra accounts. The key is to have a system that lets you easily calculate your tax depreciation vs book depreciation each year. For your situation with the zero-basis assets, I'd recommend setting up a simple spreadsheet that tracks: - Book value and depreciation schedule - Tax basis (zero) and depreciation (none allowed) - Annual book-to-tax adjustment needed This approach keeps your books clean while ensuring you can properly prepare your tax returns. When you convert to S-Corp, your accountant will appreciate having this information organized and readily available. The journal entries Jamal suggested will handle 95% of what you need for day-to-day operations. The more complex tracking can happen outside your main accounting system.

Just be careful about the "triple net lease" exception! If your rental is a triple net lease (tenant pays taxes, insurance, and maintenance), it specifically DOESN'T qualify for QBI under the safe harbor. Found this out the hard way last year.

This is such great timing for this discussion! I've been managing a small duplex for the past three years and finally understand why my tax preparer kept asking about my "hours spent" on rental activities. I thought it was just for passive activity rules, but now I see it's also crucial for QBI qualification. One thing I'd add for anyone tracking their rental hours - don't forget to include time spent on tenant communications, property advertising/marketing when units are vacant, and research time for repairs or improvements. I was only tracking the physical maintenance time initially, but realized I spend significant hours on emails, phone calls, and researching contractors/suppliers. Also, if you're using property management software or apps like Zillow Rental Manager, those often have built-in time tracking features that can help with contemporaneous record-keeping. Much easier than trying to remember to update a spreadsheet every time you do something rental-related!

Something nobody mentioned yet - make sure your accounting software is set up correctly to track your S-corp transactions properly! I messed this up my first year and had a nightmare fixing it at tax time. For QuickBooks, you should have your S-corp set up as a separate company file, not just running everything through your personal books. And make sure you're tracking your salary payments as actual payroll with proper withholding, not just as owner draws. This makes a huge difference when it's time to prepare your 1120-S and K-1.

I went through this exact same confusion when I first elected S-corp status for my single-member LLC! Yes, you absolutely need the K-1 - it's how your business income gets reported on your personal return. Here's what I wish someone had told me upfront: even though you're the sole owner, the S-corp election creates a separate tax entity. Your business files Form 1120-S, which generates a Schedule K-1 that shows your share of business income, deductions, and credits. You then take that K-1 and use it when filing your personal Form 1040. Given your numbers ($145K revenue, $72K salary, $43K distributions), it sounds like you have the salary vs. distribution split in a reasonable range, which is good. The IRS does scrutinize S-corps to ensure owner-employees are paying themselves reasonable compensation. For software, TurboTax Home & Business can handle entering K-1 information on your personal return, but you'll need business tax software (like TurboTax Business or similar) to actually prepare the 1120-S that generates your K-1. Many people in your situation find it worth paying a professional for the business return and then doing their personal return themselves. Don't skip the K-1 - it's required and the IRS will definitely notice if your personal return doesn't match what your S-corp is reporting!