1099's and LLC partnerships

[JenMO]

A salary and extra money were taken out of the LLC ptnshp during the year. 2 partners - Is there anything wrong with issuing a 1099 for the 2 partners for the money they have withdrawn. I know it could be guaranteed payments, but does it make a difference? I think they would like a 1099 to be issued. I don't do their partnership return, just the 1099's.

[BOB W]

All tax return issues are handled on the K-1. No need to issue 1099s. If you fool with the 1099s you will cause extra income to your clients. Since you don't do the partnership return you don't have any right to issue 1099 for the partnership relating to the partners.

[JenMO]

They brought it to me to do. Why would it cause more income to the partners? Wouldn't the 1099 be an expense to the partnership and then the profit or loss would flow thru? I guess they would be reporting 1099 income on Sch C instead of partnership income on Sch E.. Should I suggest that they inform their tax preparer of these guaranteed payments?

[BHoffman]

Hi Jen - agree with Bob. Not a good idea to issue 1099 forms to partners for a variety of reasons. Cross that chore off your list

[S T]

Distributions

Aren't both the salary and other monies, a distribution?

Or the salary a guaranteed payment and other monies a distribution?

What does the partnership agreement state?

I agree with Bob W and B Hoffman - NO 1099 forms to the partners also No W2 forms to the partners either.

Sandy

[BOB W]

They brought it to me to do. Why would it cause more income to the partners? Wouldn't the 1099 be an expense to the partnership and then the profit or loss would flow thru? I guess they would be reporting 1099 income on Sch C instead of partnership income on Sch E.. Should I suggest that they inform their tax preparer of these guaranteed payments?

If you have any input in regards to the partnership return that is something else.... But any isolated income to the partners should be handled as "guaranteed payments" on the partnership return. 1099s is just spinning wheels...................and going no place............

[JenMO]

Thanks, I agree and will inform the partners to tell their preparer of guaranteed payments to each partner. Thanks for imput.