Level 7

Question

1099-MISC Box 10 Taxable Attorney Fees

Forum|Forum|9 months ago
October 3, 2025
3 replies
19 views

Attorney received a 2024 1099-MISC for settlement proceeds not received until 2025.

TP reports business on Schedule C. I usually report the 1099-MISC in gross receipts and back out the amount on line 27a Other Expenses with a description stating the payment wasn't received until 2025.

However, the 1099-MISC worksheet box 10 has a line below the gross proceeds paid to an attorney that says "Taxable attorney fees to transfer to Schedule C".

Is this where I should back out the amount that wasn't received until 2025?

I can't tell if the 1099-MISC gross proceeds are being reported and then zeroed out, allowing the IRS to match the 1099-MISC.

What is the "Taxable attorney fees to transfer to Schedule C" line for? There is no explanation for that line in PS.

ProSeries Professional

IRonMaN

Level 15

Your client only does work for folks that send him a 1099?

Slava Ukraini!

D

david3Author

Level 7

No, why?

However, this 1099-MISC is a huge amount compared to his other fees.

IRonMaN

Level 15

"No, why?"

Because you seem to be focused on the 1099s. The 1099s in the software don't get transmitted to the IRS so there is no reason to use them. Just enter what the actual receipts were for the year on schedule C. You can always attach a note to the return stating the reason for the income to be less than the 1099s but the IRS isn't going to read it. Just leave a note in the file in the event the client gets a notice somewhere down the road about the timing issue.

Slava Ukraini!

sjrcpa

Level 15

Did he really not receive until 2025?

Or did he just not deposit it until 2025?

The more I know the more I don’t know.

D

david3Author

Level 7

He says he didn't receive it until 2025. The 1099 info shows that the payment was sent toward the end of 2024 so it appears to be reasonable that the TP didn't receive it until January 2025.

BobKamman

Level 15

There are still some lawyers filing Schedule C? How quaint.

Presumably IRS has read its own instructions to Box 10, Form 1099-MISC:

"Box 10. Shows gross proceeds paid to an attorney in connection with legal services. Report only the taxable part as income on your return."

So no, this is not like when IRS matches 1099-NEC contractor income with Schedule C gross receipts. Just put that out of your head.

Typically, the check is issued to both the attorney and the client; both of them have to sign it; it gets deposited into the attorney's trust account; and separate checks are then written from the trust account for the attorney (for fees, and reimbursement of costs) and to the client. That may be why a check issued in 2024 didn't show up as income until 2025.

If the "costs" were advanced in prior years, they should not have been deducted then, because they are just advances to be reimbursed. Is that how you are handling them?

D

david3Author

Level 7

Yes.

Thanks for your help.

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