Attorney Clients

[dsi]

I have an attorney client, sole proprietor. I have a couple of questions re 1099's.

1. Do attorneys issue 1099's to their clients?

2. Do attorneys report on their Sch C the total of the 1099's they receive?

3. What about the money the receive, and is reported on a 1099 but is in their trust fund account?

[Greenbriar]

1099 MISC not received

I have a client who is an attorney. He doesn't receive 1099's and he doesn't issue 1099's to clients. Not sure what circumstances would dictate issuing 1099's to clients since they pay him. My att'y client does issue 1099S on real estate closings, but that's it. On his Sked C, he reports his gross income which is entirely monies received from his clients, not 1099's. Hope this helps.

[erchess]

Trust Fund Account

When you speak of monies in the trust fund account I assume that you mean retainers which people pay in advance of the work and that become his money as he does the work.

If that is what you mean then he is taxed only on what he has earned but note well that he is taxed on all he had earned by the end of the taxable year even if for some reason there was earned money he had not yet withdrawn. This is because of the doctrine of constructive receipt.

[Uncle Sam]

Attorney Clients

There is a Market Segment Specialization Program audit guide on Attorneys.

I suggest you read through the material to see how it's suggested for various attorney transactions to be reported.

[JoshinNC]

Why would you have an attorney on Sch. C?

Unless their running a very unprofitable business I can't think of why you wouldn't advise them to be an LLC or S-Corp. The SE tax must be killin' 'em. But, of course, lawyers know everything (wink, wink) so let them figure it out.

[dsi]

Thanks guys, I will read the MSSP on this subject and move forward. BTW, this client just came to me yesterday. He has not filed a return in 6 years. Now he needs to catch up because he is in bankruptcy discussions. Go figure.

[Lion]

Lawyers!

Gotta love lawyers!

[JoshinNC]

Never mind my earlier question

Thanks guys, I will read the MSSP on this subject and move forward. BTW, this client just came to me yesterday. He has not filed a return in 6 years. Now he needs to catch up because he is in bankruptcy discussions. Go figure.

I didn't know you were dealing with a deadbeat. Setting up another entity would just double the number of delinquent returns, best to keep it "simple" for him/her.

[Lion]

Get Paid

And, get paid up front.

[Davc]

I didn't know you were dealing with a deadbeat..

Next time read the title.

[Davc]

Gotta love lawyers!

Why???????

[BHoffman]

Agreed. Lawyers almost always get the extra PITA charge. Engineers too.