Has anyone actually claimed QBI for oil royalties and been audited? I'm worried about claiming this deduction and then getting flagged.

The key distinction everyone's mentioning about working vs. royalty interests is crucial here. Since you mentioned the trust "divides it up between all the relatives" and you're receiving monthly payments, this sounds like it could be structured as royalty interests rather than working interests. However, don't give up on QBI entirely yet. There's also Section 199A(c)(3)(B) which allows certain rental real estate activities to qualify for QBI if there's sufficient participation. While oil & gas royalties are different from rental real estate, some taxpayers have successfully argued that certain mineral extraction activities can qualify under similar principles. I'd recommend getting copies of the original lease agreements and trust documents to understand exactly what type of interest your husband's uncle held. Look for language about who bears the costs of extraction, development, and operations. If the trust or beneficiaries have any responsibility for these costs (even if minimal), you might have a stronger case for QBI treatment. Also, consider that even if the income doesn't qualify for QBI, you might still be able to deduct depletion allowances which can provide significant tax benefits for mineral interests.

Don't forget that if you can't pay the full amount right away, you can set up a payment plan online at irs.gov/payments. I had a CP14 for about $3,500 last year and set up a monthly payment plan in about 10 minutes. You'll still accrue some interest but it's way better than ignoring it and getting hit with more penalties.

I went through this exact same situation about 6 months ago and it was really stressful at first. Just to echo what others have said - you don't need to specify a month when making your payment. The CP14 notice will have all the information the IRS needs to apply your payment correctly. One thing I learned is that the sooner you pay, the better. Those penalties and interest really add up fast - I waited an extra month thinking I had time and ended up paying about $200 more than I would have if I'd just paid immediately. Also, if you're worried about whether your payment was applied correctly after you send it, you can check your account transcript online at irs.gov about 2-3 weeks after they receive your payment. That way you'll have peace of mind that everything was processed properly.

Just wanted to point out something about the service plan - if you started your business in January but didn't get the phone until July, were you using a different phone for business from Jan-July? If so, don't forget to include the business portion of those expenses too! Many people miss out on legitimate deductions by forgetting about partial year expenses on old devices.

Great question! I went through this exact same situation last year with my consulting business. You're on the right track with your calculation - since you're financing the phone, you can only deduct the business portion of what you've actually paid during the tax year. So yes, $129 x 6 months x 0.8 = $619.20 for the phone payments is correct. Don't forget to also calculate your service plan deductions: $95 x 6 months x 0.8 = $456 (assuming you got the service plan when you got the phone in July). One tip that helped me a lot - keep a simple log for a couple weeks showing your business vs personal usage to justify that 80% figure. Screenshot your recent calls, texts, and app usage if possible. The IRS likes to see documentation backing up your business use percentage claims. Also, make sure you're consistent with how you categorize this expense each year on your Schedule C. Most people put it under "Utilities" but "Other expenses" works too - just pick one and stick with it.

When we bought our house last year I was paranoid about this too! Our bank actually suggested using wire transfers instead of cashier's checks to avoid any holds or delays. The wire fee was like $25 but totally worth avoiding the stress of wondering if the money would clear in time!

As someone who just went through this exact scenario a few months ago, I can confirm it's really not a big deal from a tax perspective. We consolidated about $50k from my spouse's account into mine for our down payment and closing costs. No issues whatsoever with the IRS. The key thing is just keeping good records. I made sure to save copies of the transfer confirmation, both bank statements showing the money moving, and our closing documents. Having that paper trail made me feel much more confident about the whole thing. One tip though - give yourself a buffer of at least 2-3 business days between the deposit and when you need the cashier's check, just in case there are any unexpected holds on the funds. Better safe than sorry when it comes to closing day timing!

Have you looked into treating this as a return of capital under Section 301(c)(2) rather than a dividend? If the C-Corp has sufficient E&P to cover the distribution, that's problematic, but if not, you might be able to treat at least part of it as a return of capital up to the shareholder's basis. Also, consider whether the franchise sale could qualify as a sale of a separate business segment under Section 302(e)(2), which would support partial liquidation treatment even without explicit documentation.

This is a complex situation that requires careful analysis of multiple code sections. Given that the C-Corp already paid tax on the gain but the shareholder received the proceeds directly, you're essentially dealing with a constructive dividend unless you can successfully argue for different treatment. Your best path forward is likely the partial liquidation argument under Section 302(b)(4) combined with 302(e)(2). The key factors working in your favor are: 1) genuine contraction of business operations (50% reduction from two locations to one), 2) complete termination of one business segment, and 3) the distribution was directly attributable to the business contraction. The lack of formal documentation is problematic but not necessarily fatal. Rev. Rul. 75-223 and several Tax Court cases have recognized partial liquidations based on substance over form when there's clear evidence of business contraction. Document everything you can about the business reasons for the sale and consider preparing a detailed memorandum establishing the facts and legal basis for partial liquidation treatment. One additional consideration: make sure to calculate whether the shareholder has sufficient basis to absorb the distribution. If the basis exceeds the distribution amount, the entire amount could be treated as a return of capital under a successful partial liquidation argument. You might also want to consider filing a protective election or amended return with alternative treatments to preserve your options if the IRS challenges the characterization.