I think everyone is overthinking this. If your LLC remained active (you paid the fees, maintained registration, etc.) then it was never "started up" again - it was just continuing. Section 162 expenses are for ongoing businesses. Section 195 startup costs are for brand NEW businesses or completely new activities that are totally different from what you did before. The fact that you had a dormant period doesn't magically turn regular business expenses into startup costs.

Just wanted to share another perspective on this since I've dealt with IRS audits on business continuity issues. The key factor the IRS looks at is whether you had "regular and continuous" business activity, not whether you had revenue. In your case, maintaining business licenses, keeping a website active, and being ready to respond to business opportunities demonstrates continuity of operations. The IRS Revenue Ruling 58-112 specifically addresses this - a temporary cessation of business activity doesn't convert regular business expenses into startup costs as long as the business entity remains active and you maintain the intent to continue operations. Your Section 162 treatment was absolutely correct. I've seen taxpayers get into trouble when they incorrectly reclassify continuing business expenses as startup costs during audits, because it raises red flags about whether they understand their own business structure. Stick with what you filed - you're on solid ground here.

I work for a tax resolution firm and see this "erroneous death marker" issue several times a year. Here's what I tell my clients: The fastest resolution path is actually through the IRS Taxpayer Advocate Service (TAS) that Sean mentioned, especially since you have a time-sensitive mortgage closing. Call 1-877-777-4778 and explain that the incorrect death status is creating financial hardship. They can issue a Taxpayer Assistance Order which essentially forces the IRS to prioritize your case. While waiting for TAS to act, simultaneously visit Social Security in person with multiple forms of ID - driver's license, passport, birth certificate if you have it. The SSA death file is often the original source of these errors. For your immediate tax filing needs, you'll have to paper file with a cover letter explaining the situation. Include copies (not originals) of your ID and any correspondence you've received about this issue. Pro tip: When dealing with the mortgage company, get a letter from your tax preparer or CPA confirming that you've filed returns in recent years. This can help demonstrate to underwriters that the death record is clearly erroneous while you're waiting for the government to fix their mistake. Good luck with your closing!

I went through something very similar about 8 months ago! The IRS had me marked as deceased due to what they called a "database synchronization error" with Social Security. Here's what worked for me: First, don't panic about your mortgage closing - I was in the exact same boat and it worked out fine. Contact your loan officer immediately and explain the situation. Most lenders have dealt with this before and can usually work with you as long as you show you're actively resolving it. The absolute fastest route is calling the Taxpayer Advocate Service at 1-877-777-4778 first thing in the morning. Tell them about your home closing timeline - they prioritize cases with financial hardship. I got a callback within 48 hours and they issued an expedited correction order. While waiting for TAS, visit Social Security in person (not online, not by phone - IN PERSON). Bring your driver's license, passport if you have one, and a recent bank statement. They can often update their records same-day, which then flows to the IRS within a few days. For your taxes, you'll need to paper file this year with a cover letter. I included copies of my ID, a letter from my employer, and even a utility bill to prove I was obviously alive and active. The whole mess took about 3 weeks to fully resolve, but the mortgage company was understanding once I showed them the documentation that I was actively fixing it. Hang in there!

Just wanted to share some good news - I was in almost exactly your situation last Tuesday. SBTPG said it was sent, Chime said "tomorrow," but then I actually got it around 9pm that same night! Seems like Chime sometimes underpromises and overdelivers. Hope you see yours pop up tonight!

This is such a common frustration with SBTPG and Chime! I went through the exact same thing last month. SBTPG told me my refund was "sent" but Chime wouldn't release it for 24 hours. What I learned is that even though Chime advertises early direct deposit, they're more conservative with tax refunds that come through third-party processors like SBTPG. The ACH network still has standard processing times, and Chime waits for full settlement before releasing funds from these processors. It's annoying when you're expecting that "early" deposit benefit, but at least you know it's actually on its way now!

I'm dealing with a similar situation and this thread has been incredibly helpful! I owned my home for 15 years, lived in it for the first 10 years, then rented it out for 3 years when I moved for work, and finally moved back in for the last 2 years before selling. Based on all the information shared here, especially the specific tax code reference in Section 121(b)(5)(C)(ii)(I), it sounds like my 3-year rental period wouldn't count as non-qualified use since I lived there first. This is such a relief because I was worried I'd have to pay capital gains on a portion of my $180,000 gain. The explanations about how this exception exists specifically for people who relocate for work or other reasons really makes sense. It's good to know the IRS recognizes that homeowners sometimes need flexibility without losing their tax benefits. Has anyone here actually filed their taxes using this interpretation and had it accepted without issues? I want to make sure I'm not missing anything before I finalize my return.

This is exactly the kind of situation where the non-qualified use rules trip people up, but you're actually in good shape! Based on your timeline, you should qualify for the full $250,000 exclusion on your $119,000 gain. The key is understanding that "non-qualified use" has a specific exception for periods that occur AFTER you've already used the home as your principal residence. Since you lived in your Chicago house from 2010-2018 before renting it out from 2018-2020, that rental period falls under this exception and doesn't count as non-qualified use. Think of it this way: the IRS created this exception specifically for situations like yours where homeowners need to relocate temporarily (for work, family, etc.) but aren't ready to sell immediately. They don't want to penalize genuine homeowners who rent out their property as a bridge solution. Your timeline shows: - 12+ years total ownership ✓ - 10 years total residence use ✓ - 2+ years residence use in the last 5 years before sale ✓ - Rental period that doesn't count as non-qualified use ✓ You meet all the requirements for the full exclusion. Your entire $119,000 gain should be tax-free. Just make sure you have good records of your occupancy dates in case the IRS ever asks for documentation.

Just wondering - has anyone used those "tax relief" companies that advertise on radio/TV for situations like this? They claim they can settle with the IRS for "pennies on the dollar" but I'm not sure if they're legit or scams.

I've been through almost the exact same situation - 6 years of unfiled returns after getting overwhelmed by an initial IRS notice. The anxiety was paralyzing, but dealing with it was actually much less scary than I had built up in my head. Here's what worked for me: I started by requesting my wage and income transcripts online from the IRS website. This showed me exactly what employers had reported each year, so I didn't have to track down old W2s. Then I filed all the missing returns at once using tax software (TurboTax actually handles prior years pretty well). The biggest shock? I actually got refunds for 3 of those years because I had overpaid through withholdings. The refunds almost completely offset what I owed for the other years. Don't let the anxiety keep you frozen - the IRS genuinely wants to work with people who are trying to get compliant. You've been having taxes withheld this whole time, which shows good faith. Start with getting those transcripts and you'll have a much clearer picture of where you actually stand financially. You might be pleasantly surprised.