1099-INT From S-Corp

[geekgirldany]

Customer is a builder. Holding one house that he hasn't been able to sale. He is a S-Corp. He took money from some CDs to pay off the loan on that house. The rest of the money he loaned to a contractor he knows to help him out. The money was deposited in the S-Corp and the payments for interest on the loan was made to the S-Corp. So far a interest only loan.

1. The interest totals $12,000. Do I need to do a 1098 Mortgage Interest Statement to show that the contractor paid the interest to the S-Corp? Or file another type of interest form?

2. I assume that this is just a flow through the S-Corp to shareholder showing interest income.

I have never done this before so I would appreciate any help.

[ChEAr$]

1098's

Customer is a builder. Holding one house that he hasn't been able to sale. He is a S-Corp. He took money from some CDs to pay off the loan on that house. The rest of the money he loaned to a contractor he knows to help him out. The money was deposited in the S-Corp and the payments for interest on the loan was made to the S-Corp. So far a interest only loan.

1. The interest totals $12,000. Do I need to do a 1098 Mortgage Interest Statement to show that the contractor paid the interest to the S-Corp? Or file another type of interest form?

2. I assume that this is just a flow through the S-Corp to shareholder showing interest income.

I have never done this before so I would appreciate any help.

Unless this S corporation (btw, HE is not an S corporation!) is in the trade or business
of making mortgage loans, a 1098 is not required, or is called for.

Too many times these days private individuals think they have to issue a 1098. Not so.

[geekgirldany]

Thanks I wasn't sure about it. Actual title of my thread is wrong also I was thinking 1099-INT... then after my brain kicked in I thought of a 1098. Its good to know I won't have to do one. I had never ran into this situation.

Yeah I know he isn't a S-Corp. Should have put he has a S-Corp. I have noticed when I am pooped out I make mistakes in my posts.

[Snaggletooth]

Dany

Who paid the interest? Your client or the corporation?

If your client paid it, I believe this is investment interest, as in Form 4952.
If the corporation paid it, I would consider it operational interest, and deductible
against ordinary income. The latter is a far better situation for your client's
taxes than the former. Not sure which is better legally, but no question which is
better for his taxes.

[geekgirldany]

I apologize I probably did not post it correctly.

A S-Corporation loaned a person money. So far a interest only loan. This person was a contractor that my customer (shareholder in S-Corp) knows. So the contractor paid the interest to the S-Corporation. I wasn't sure if a form needed to be filed showing the interest paid.

[ChEAr$]

therefore

I apologize I probably did not post it correctly.

A S-Corporation loaned a person money. So far a interest only loan. This person was a contractor that my customer (shareholder in S-Corp) knows. So the contractor paid the interest to the S-Corporation. I wasn't sure if a form needed to be filed showing the interest paid.

corporation records the interest income which of course flows through on schedule k1 to
shareholder.

[geekgirldany]

Is there a separate place to put interest income on the 1120S? I found where it shows on the K-1 but it appears that it links back to page 3 of 1120S. I can not find anything that shows interest income on there.