Issuing a 1099 to Correct Erroneous 1099s?

[NA_LLC]

Hello! Hoping someone can share their thoughts with me on a scenario we're dealing with...

The TP had a Partnership (old, EIN #1) that was converted to an S-Corp early 2018 by starting a new entity, with a new EIN (new, EIN #2). Client was sure all the Payers/Clients they work with had updated their records, but when we rec'd the 1099s, out of 26 total, only 4 were correctly issued to the [new] company. All the rest were either issued to the [old] company entirely, or split between the two.

Its too messy to try to have the Payers make corrections for reasons we are all familiar with.

We decided to go with just filing 2 Returns, one for each company (luckily we didn't officially "close" the company last year in case something like this happened). But now we are having a hard time figuring out how to split the expenses up b/c the majority is payroll, which is all (already) reported under the [new] company. So now we are thinking we should just 1099 the [new] company from the [old] company??? Since technically the [new] company IS the one who actually rec'd the income. Anyone have any thoughts on this????


Thanks so much in advance, really appreciate any and all input!!

Tawni

[spanel]

I like this saying alot.... Why are you going something wrong, just because someone else did something wrong?

#1, Close the partnership. Probably should have been marked final in 2017, but do so in 2018.
#2 File the S corp with ALL the income/expenses.
#3 Have the client fax/hand deliver another W9 and have them reissue corrected 1099M (S corps don't receive any, so it should just clear out the income to the partnership).

Chris

[kathyc2]

Was a new corporation started with corporation papers or was this a LLC that changed it's tax treatment?

You say "early" in 2018. Most likely you should prepare short year forms for both, unless by "early" you mean 1/1/18.

Most likely the companies that split the 1099's did it based on which company they wrote the checks to. Were checks written to the partnership deposited to corp bank account?

[BHoffman]

Can the erroneous 1099 amount be treated like Nominee Income?