1099 Question

[Dennis]

I have a client who is just now filing his 2002 tax return. The IRS sent him a letter with the W-2's and 1099's they received under his SS#. He also started and S-Corp in March of 2002. The 1099 he received from one of the companies he provided services for put the full amount under his SS# instead of including some of the amount under the S-Corp's tax ID #. I'll see if they can reissue new 1099's with the break-out. Should I show the full amount of the 1099 on schedule C and deduct that amount from the revenue deposits he made in the S-Corp's bank account and show the remaining amount as revenue to the S-Corp. Any help would be appreciated. Thanks

[Matt Sova]

Happens a lot

I do that all the time. I have sole owner S-Corps that used to be Schedule C's. They still receive 1099's in the personal name. I record 100% as revenue on Schedule C then under other expenses I put in "Reported on XYZ Corp EIN xx-xxxxxxx" and the same dollar amount there for a 0 net income Schedule C.

[Dennis]

Thanks Matt

So what your saying is if the 1099 showed $30,000 I should include that amount on Schedule C and also $30,000 in other expenses with an explanation, see XYZ Corp Return. Then I put the 30,000 income on the S-Corp return and any expenses that were incurred as well. Are there any issue relating to SE tax that might pop up? Thanks again

[BOB W]

1099

Dennis> I do the same Matt. There is no S/E issues on the Sch C but there is always W-2 issues on an S Corp.

[JON]

ONE OF THE W-2s S CORPs

No matter what you do-I hope one of the W-2s is from the S-Corp. If he has already filed the S Corp 1120S and related S corp payroll tax returns and W-2s for 2002 then you have a chance of explaining. If you think your going to retroactively show it it could have been filed-GOOD LUCK..

[Dennis]

No W-2 From S-Corp

This is a new client and his books are really a mess. He has not filed his 2002 personal or S-Corp returns and he paid himself no salary from the S-Corp just took distributions, I told him that will be a payroll tax issue with the IRS but I this point he just wants everything filed and then square up with the IRS. That's why I think I might need to show some income on schedule C and some on the 1120S, at least that way there are some employement taxes being paid.