1099 k third party reporting

[JenMO]

Son ran the credit card/paypal business for father. Paypal in son's name(but monies were going to Dad), 1099 K came in son's name. Son didn't receive 1099k, didn't report amount because the proceeds all went to Dad. Now the IRS is assessing more tax and penalty because of unreported income to son, although Dad reported it all on his return. Any suggestions on how to fix?

[Kram BergGold]

What I Would Do

Write a letter of explanation and send a copy of Dad's return or at least the Schedule C with it to IRS. I would include a sheet itemizing the income items on Dad's return showing what was on credit cards, what was checks, what was cash. This should solve the problem. If this inquiry is for a year prior to 2015 I would amend any returns after that year to avoid this problem from coming up again. You would do a Schedule C showing the amount on 1099-K and then remove it as a returns and allowance. Again I would include an explanation.

[spanel]

Write a letter of explanation and send a copy of Dad's return or at least the Schedule C with it to IRS. I would include a sheet itemizing the income items on Dad's return showing what was on credit cards, what was checks, what was cash. This should solve the problem. If this inquiry is for a year prior to 2015 I would amend any returns after that year to avoid this problem from coming up again. You would do a Schedule C showing the amount on 1099-K and then remove it as a returns and allowance. Again I would include an explanation.

And immediately switch the paypal to the dads name/ssn like it should have been from day 1.

Chris