Form 1099-K

[Questionguy101]

Father owns a business. Son helped him to set up the credit card service under his own name. Now the Form 1099-K has been issued to the son while the income belongs to the father.

What is the best way to straighten this mess up? I am thinking to tell the son to issue a Form 1099-MISC to his father at the same amount as the one on the Form 1099-K. The son should then files a schedule C in his own tax return to report the Form 1099-K amount. And then he uses a reverse entry to cancel it out by noting that it is actually nominee income. Or the alternative is to do nothing and explain to the IRS wait until they come to question it. What's your opinion?

[Burke]

I think the 1099K requirement was suspended for 2011. So they are probably not matching yet. However, you could do it your way.

[krazykev]

I had a similar situation with a client that runs a beauty salon. Client has one credit card machine and leases out the booths to different people. However all credit cards are ran through the one machine then paid back out to the individuals. So owner got a 1099-K for all receipts, most of which weren't hers. Although the 1099-K box is not used I still broke out the receipts on a sub-schedule of the receipts listing the total to match to the 1099-k, then had another line backing the amounts attributed to the booth renters back out.

Thankfully, client keeps a log for all credit cards ran and who it goes to so there wasn't much work to back out the amount. I think your method of listing the full 1099 amount then have a negative line for nominee should be sufficient.