Thanks everyone for the helpful responses! This has been really confusing me since I got my EIN. Just to clarify my situation - I'm a solo LLC (no S-Corp election) and literally have zero employees, zero wages paid, zero payroll activity. Based on what everyone is saying, it sounds like I don't need to file Form 940 at all unless the IRS specifically mails me one, which they probably won't since I just got my EIN this year. I feel much better about this now. It's frustrating how the IRS instructions can be so confusing when the actual answer seems pretty straightforward!

I went through this exact same situation when I started my consulting business! The confusion comes from the IRS trying to cover all possible scenarios in their instructions. Here's what I learned after dealing with this: If you're a solo LLC with no employees and no wages paid, you absolutely do NOT need to file Form 940. The form is specifically for Federal Unemployment Tax (FUTA), which only applies when you have actual employees. The "check box C" instruction you mentioned only applies if the IRS physically mails you a Form 940 - which they sometimes do automatically to businesses with EINs because they don't know who has employees. Since you just got your EIN this year and have no payroll activity, it's very unlikely they'll send you one. Keep good records showing you had no employees this year, and you'll be fine. When you do eventually hire employees (if you plan to), that's when you'll need to start worrying about Form 940, along with Form 941 for quarterly payroll taxes. But for now, focus on the tax forms that actually apply to your solo business situation!

I'm actually going through this exact same situation right now and this thread has been incredibly helpful! I had my LLC in Florida and thought I was all set after filing dissolution paperwork with the state last year, but then I got a similar letter from the IRS a few weeks ago. Reading through everyone's experiences here, I realize I made the same mistake of assuming state and federal closure were connected somehow. It's honestly a bit of a relief to see how common this oversight is - I was feeling pretty foolish about not knowing I needed to handle the IRS separately. Based on all the great advice in this thread, I'm planning to call that IRS Business line (800-829-4933) this week to check my EIN status and figure out what final return I need to file. My LLC never made any money either, but it sounds like filing that final return with the "final return" box checked is crucial for officially closing things out with the IRS. Thanks for starting this discussion - you've probably saved a bunch of us from years of confusing penalty notices! It's amazing how this one thread has turned into such a comprehensive guide for properly closing an LLC.

I've been dealing with this exact same issue for months now! I filed dissolution paperwork with my state (Ohio) over a year ago but kept getting IRS notices. Like everyone else here, I had no idea that state and federal closure were completely separate processes. What finally worked for me was following the same steps everyone's mentioned - called the IRS Business line (800-829-4933), confirmed my EIN was still active, then filed a final Schedule C with the "final return" box checked. The whole process took about 2 weeks once I knew what to do. One thing I wanted to add that might help others: when I called the IRS, they also mentioned that I should keep copies of everything I send them for at least 3 years. The agent explained that sometimes the "final return" processing can take a while to update in their system, so if I get any more letters in the next few months, I'll have documentation showing I properly closed the business. Also, for anyone nervous about calling - the IRS agents were actually really patient and helpful. They deal with this situation constantly and understand it's a common area of confusion. Don't let phone anxiety stop you from getting this resolved!

Don't make this harder than it needs to be! The food delivery apps should have sent you a 1099-NEC or 1099-K showing your income. Just report that on Schedule C. For the vehicles, if youre using standard mileage, you just track miles and multiply by the rate (65.5 cents per mile for 2023). no need to worry about all this complicated trade-in stuff unless your accountant says so!!!!

As someone who's dealt with business vehicle trades recently, I want to emphasize how crucial it is to get the depreciation recapture calculations right. When you trade in business vehicles, you need to account for any depreciation you've previously claimed (or deemed to have claimed with standard mileage). For your Honda Civic with 20% business use, you'll need to calculate the business portion of any gain/loss. Same with the Elantra at 85% business use. The key is determining your adjusted basis for each vehicle - original cost minus accumulated depreciation for the business portion. One thing that caught me off guard was that even with the standard mileage method, the IRS considers you to have taken depreciation based on the depreciation component built into the mileage rate. This affects your basis calculation when you dispose of the vehicle. I'd strongly recommend keeping detailed records of each vehicle's purchase price, trade-in value, business use percentage, and total business miles driven. You'll need all this information for proper reporting on your Schedule C and potentially Form 4562.

This thread has been incredibly educational! As someone who's never dealt with IRS notices before, seeing all these real experiences has been way more helpful than just reading generic advice online. A few key takeaways I'm getting from everyone's stories: 1. CP2000 notices are much more manageable than full audits - they're basically just asking you to explain a discrepancy 2. Many times these notices happen because of address changes or clerical errors, not because you did anything wrong 3. The 30-day response deadline is crucial - don't let it slide 4. There are cost-effective tools like taxr.ai and Claimyr that can help without paying for expensive audit defense services 5. Sometimes you already have audit protection through your tax software What I'm curious about is whether anyone has experience with what happens if you partially agree with a CP2000? Like if the IRS says you owe $4,700 but you think the correct amount is only $2,000 due to business expenses or deductions they didn't account for? Do you need to file an amended return in that case, or can you just explain the discrepancy in your response letter? Thanks to everyone who shared their experiences - this community is amazing for getting real-world advice instead of just theoretical information!

Wow, this thread has been a goldmine of information! I came here with the same panic about a CP2000 notice and feeling like I needed to hire expensive help immediately. Reading everyone's experiences has completely changed my perspective. I'm particularly grateful for the distinction everyone made between CP2000 notices and actual audits - I had no idea there was such a significant difference. The fact that these are mostly just automated income matching issues rather than full investigations makes this feel so much more manageable. The practical advice about contacting the company for the 1099, keeping detailed records, and using certified mail is exactly what I needed to hear. And learning about tools like taxr.ai and Claimyr as middle-ground options between doing everything myself and paying thousands for audit defense services is incredibly valuable. What really strikes me is how many people here had similar situations that got resolved fairly easily once they understood the process. It's amazing how much less scary this becomes when you have real examples from people who've been through it rather than just generic "contact a professional" advice. Thanks to everyone who took the time to share their experiences - you've probably saved a lot of people from unnecessary stress and expense!

This is why the tax code needs major reform!! These circular references are deliberately confusing to make people mess up their taxes. It's a trap to collect more penalty fees. The whole system is rigged against average people who don't have accountants.

I ran into this exact same circular reference nightmare last year! What finally worked for me was treating it like an iterative process rather than trying to complete each form perfectly the first time through. Here's the step-by-step approach that broke the loop for me: 1. Start with your 1099-B and calculate your basic capital gain/loss (proceeds minus cost basis) 2. Put that preliminary amount on Schedule D Line 21 (or wherever your gain/loss lands) 3. Transfer that number to Form 1040 Line 13 4. Complete your Form 1040 through Line 44 using this preliminary capital gain 5. Now go back to Schedule D and use the tax information from Line 44 to complete any remaining calculations 6. If the final Schedule D number is different from your preliminary amount, update Form 1040 Line 13 and recalculate For a single stock sale like yours, the numbers usually don't change much between iterations, so you might only need to go through this process once or twice. The key insight is that these forms were designed assuming you'd use tax software that handles the circular references automatically - doing it by hand requires this back-and-forth approach. Don't let it drive you crazy - you're not missing something obvious, the forms really are designed this way!