My client co owns property, in an LLC with outside co-owners. They received a 1099 for the entire rent received in the LLC's name and tax ID. what should they do?

Forum|Forum|3 years ago
March 15, 2023
3 replies
23 views

The 1099 amount is only partially belongs to the LLC. I have put down the percentage the LLC owns, in form 8825. Is that enough to satisfy the IRS matching process? Do I need to do something more so that the entire burden of the rental income does not fall on the LLC? Please help?

ProConnect Tax

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George4Tacks

Level 15

So one property with LLC and another without? https://proconnect.intuit.com/community/proconnect-tax-discussions/discussion/coownership-of-rental-property-by-a-client-personally-and-1099/00/253738

Answers are easy. Questions are hard!

BobKamman

Level 15

Are they filing a partnership or corporation return for the LLC, or just planning on putting it on their Schedule E?

H

hamida_surtiAuthor

Level 3

They are filling a partnership return for the LLC as there are two partners in the LLC and some outside investers

BobKamman

Level 15

So, there is one property, but the deed says "Bob-Carol LLC as to some percentage, and Ted and Carol Smith as to some percentage." And when the tenant asked the LLC couple for a W-9, they were so proud of the LLC that the guy at the seminar had told them to set up, that they gave them just the one number? So what did they expect? Technically, they should now give the other owners a 1099 for their share of the rent. But the next best solution is to report all the rent on the 1065, then deduct the payments to co-owners as, let's see, I would call it "payments to co-owners."

George4Tacks

Level 15

I would report 100% of the rental income and take an expense for Nominee share.

You should also file a 1099 for the rents to this nominee.

?? Work with the entity issuing the 1099 to file two 1099s in the future. ??

Would it be correct that the LLC does not own 100% of the property?

Answers are easy. Questions are hard!

H

hamida_surtiAuthor

Level 3

no the LLC does not own 100% of the property in question. The 1099 received was rent abatement payment from the county. In the past the property was reported as 50% on form 1065.

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