Discussion:1099 Misc Income reported to individual instead of entity
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Discussion Forum Index --> Basic Tax Questions --> 1099 Misc Income reported to individual instead of entity
Discussion Forum Index --> Tax Questions --> 1099 Misc Income reported to individual instead of entity
| 13 December 2007 | |
| My client is sole owner of LLC, taxed as S Corp. The income generated by LLC was reported by payer, on 1099 Misc. with my clients social security number, instead of the LLC Employer ID#. I filed 2006 1120S and noted that taxper requested correction of 1099 Misc. to reflect the entities taxpayer i.d. The Payer refuses to correct the 1099 and is reporting it the same way for 2007. Are we required to amend the return to Schedule C of 1040? | |
Michaelstar (talk|edits) said: | 13 December 2007 |
| Attach a statment to the individual t/r stating that the income is being correctly reported by the LLC and you will be fine. If the IRS later follows up with a notice, just explain what you have done and again, you should be fine. | |
| 13 December 2007 | |
| Your client could also fill out a form w-9 and send it to the company registered mail . This would show that he had intent to make it right and the other company screwed up. | |
| 13 December 2007 | |
| Would your advice be the same, knowing that the payer is a direct seller (Amway type business) and we are told they won't recognize any entities until a certain level is reached. My client is quite a few notches away from this "level". | |
| December 13, 2007 | |
| I would show it on Schedule C as an "in and an out". Show it coming in on C and show the same amount under "other deductions" on C with the description "income assigned to EIN # xx-xxxxxxx". | |
| 13 December 2007 | |
| Hi BEG is correct and to take it one step further client can write a 1099 Misc from himself to the LLC ID#. This happens with myself as a licensed life insurance agent all the 1099s come to my SS and I 1099 it over to our firms investment partnership. Then I do a sch C in and out on my 1040. bye | |
| December 13, 2007 | |
| Line 21 in and out with reference to where it's reported. No Sch. C necessary. | |
Michaelstar (talk|edits) said: | 13 December 2007 |
| WesR - while your method is a couple of extra steps - I really like it. Sort of makes it fool proof...... | |
| December 13, 2007 | |
| Michael, I'd amend 2006 and show the in and out on C or the return is going to be audited or adjusted. | |
| December 13, 2007 | |
| I should note that my line 21 entries show on a statement with the explanation. So there's the in entry. And the out entry, separate. Which do come to zero on the 1040 itself. But I've never received mail, so I assume that they can match. Clearly, Wes's method above is foolproof if you want to do the extra work. | |
TheTinCook (talk|edits) said: | 13 December 2007 |
| I would not use WesR's method since the IRS distributes information to state and local authorities. In my neighborhood, after filing such a Sch C the the client would start to get friendly missives wanting to know why he hasn't paid the business tax, etc. It's way easier dealing with a IRS mismatch letter then it is dealing with the local tax authorities, even if you have to deal with the Holtsville SC. | |
| December 13, 2007 | |
| I was actually thinking along similar lines, but more on the angle of relationships, and comp. If you report a 1099 out to your corp or LLC, on what basis? Is there an agreement for that? Should there be a salary instead? Or SE in this case? Etc. etc. I prefer keeping it simple. It's incorrectly reported under this number, should be reported to that number, and that's where I put it, kind of thing. | |
TheTinCook (talk|edits) said: | 13 December 2007 |
| Good point about the relationship.
Wasn't there some issue with insurance salesmen assigning income to their corps? | |
| 14 December 2007 | |
| Hi to address the "relationship". First of all if a cpa firm is licensed through one partner or two or three who cares the commissions go through the individual. If the revenue is the firms and gets split up however you need an entity to do it like an LLC. Filing a 1099 from me to the entity creates a clear path for reporting without question on my sch C tax return. I would not risk the matching by washing it through line 21 zero number with a statement. It is easier for the IRS to see it on the sch C where they expect the income to be. As for the S/E issue we pay S/E depending on who earns the money so there is no dodge ball here. And JR love you buddy but salary? I know you didnt understand the "relationship" but I did get a good chuckle out of the comment. And as far as the state and local comment wow 30 years plus of practice and never had to address that conspiracy issue. Tincook do you believe in aliens. only kidding :) bye | |
Death&Taxes (talk|edits) said: | 14 December 2007 |
| You don't practice in Philadelphia, Wes, where attaching any kind of Schedule C to your return can lead to the City claiming that you are in business, and hitting you up for a $250 license, plus a tax on the gross receipts. I take it TC is referring to the business tax that Los Angeles put into law two years ago.
That being said, I agree with your method, Wes, and would do the same. | |
TheTinCook (talk|edits) said: | 14 December 2007 |
| The AB63 Program is what I was referring to. The CA FTB shares info to the locals, some of which was shared by the IRS. Very much like the Philadelphia situation that D&T describes.
The entire program is the product of an evil alliance between the Trilateral Commission and undead Elvis! | |
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