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I definitely would be forced to retire. I hope that everyone remembers Eric before you spend all of your profits. Also, a special Thank You to Judy for her pristine Moderation and all of the rest of you who reach out so generously to help those of us in need. I couldn't do this without all of you.

Treat these as distributions to shareholders, unless you can convince them to repay the business.

Copied from the Tax Advocate's Mid Year Report to Congress: "One longstanding filing season challenge that remains unresolved is lengthy delays in resolving identity theft cases. There are two categories of identity theft cases. One involves returns that IRS return processing filters flag as potential identity theft; the IRS flagged about 2.1 million such returns. In these cases, the IRS sent a letter to taxpayers notifying them they had to authenticate their identities before receiving their refunds. The IRS typically takes several months to resolve these cases. In the second category of identity theft cases, a thief has stolen a taxpayer’s identity and filed a tax return using the taxpayer’s name and Social Security number. These taxpayers are victims and may also be experiencing the effects of identity theft beyond the context of their tax returns. Their cases are referred to the IRS’s Identity Theft Victim Assistance (IDTVA) unit for resolution. As of the end of the filing season, the IRS had about: 387,000 IDTVA cases in inventory, and the cases were taking an average of about 20 months to resolve. “These delays disproportionately affect vulnerable populations dependent on their refunds to meet basic living expenses,” the report says. In fiscal year (FY) 2023, 69% of affected taxpayers had adjusted gross incomes at or below 250% of the Federal Poverty Level." Sometimes my mind really struggles to understand this stuff

On 16 April I heard from our CT Stakeholder Liaison that he'd accepted Deferred Resignation and expected to be put on administrative leave shortly while being paid through September. By 9 May I heard from new Stakeholder Liaisons in NY (2) and NJ who are covering the northeast. I think CT's Liaison (who was great, by the way!!) was gone by 30 April. Probably the same end-date for the former NY and NJ Liaison's.

Well, it was finally improving (at least for the moment) - down from 22 months:

That's all correct and you don't need to do anything else. There is the question of basis in the S corp and whether any of those distributions are taxable, so be sure to do the basis calc on the K1.

And I would not issue any 1099 from the corp to the LLC, because you're creating hobby income and paying tax twice on the same income. Just leave it on the K1 as ordinary income and in the basis worksheets as distributions to shareholders.

20 months?!?!

I'm sure that someone who uses Drake will confirm that Drake is just sending a PDF via some secure method. Personally, I don't know why every tax pro doesn't print a PDF of every return and every other document they produce, for safekeeping, quick access and backup. I use a secure email service (sendinc.com) to exchange documents with clients. I can set the email to self destruct after as little as 1 day up to 365 days or never. I usually do 30 days. It's a very inexpensive service and most clients can use it easily. All they need to do is create an account with their email and a password of their choosing.

Exactly, for tax purposes the creation and involvement of the LLC is just a smokescreen for their dancing hobby, which is not a business!

It's sure not going to get any better. From the TA Mid-year report to Congress The TAS itself has been reduced by 25 percent. BTW, my understanding is that those who took the offer are actually leaving at the end of this month, though they will "remain on rolls" and get paid through Sept. 30.