Draw from 401K to Invest in Business

[The Occultist]

I mean, as long as the answer is that I don't need to worry about filing anything, I'm happy ;-)

 

[Taxing Matters]

We have had no less than half a dozen returns get completely rejected by the IRS (even by paper) because the EIN number had not been obtained until the following calendar year. All of them happened in the last 10-15 years. Granted, none of them had any actual income yet (not for lack of trying), only expenses, but they were completely rejected, first electronically and then paper.

Then something was wrong beyond just the EIN issue. I have never had a paper return rejected for that reason. I know those returns can indeed be processed if the entity was actually formed and did business in that tax year. When I was an officer for the IRS I routinely obtained such returns from delinquent businesses, and the service centers had no problems processing each return I sent. Nor have I had any issues on that since being in law practice. The IRS has to process those returns since the taxpayer is legally obligated to file them. There is simply no way the IRS will let a taxpayer slide on a tax obligation simply because “oops, I didn't get my EIN until a year later.”

 

[LdiJ]

Then something was wrong beyond just the EIN issue. I have never had a paper return rejected for that reason. I know those returns can indeed be processed if the entity was actually formed and did business in that tax year. When I was an officer for the IRS I routinely obtained such returns from delinquent businesses, and the service centers had no problems processing each return I sent. Nor have I had any issues on that since being in law practice. The IRS has to process those returns since the taxpayer is legally obligated to file them. There is simply no way the IRS will let a taxpayer slide on a tax obligation simply because “oops, I didn't get my EIN until a year later.”

Like I said, none of them had any actual income (not even gross income) just expenses so there was not any actual obligation at that point...and the paper returns did get rejected as well. I am not sure why my experience is different than your except perhaps that the circumstances surrounding mine were different somehow. These were all business entity forms, I never had that problem with a Schedule C...although an EIN on a Schedule C is only informational.