Skylane
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And so it's tax season day 2.......... the client has owned several vacation units at a VT ski resort for a number of years which she dutifully reports on Sch E.
The resort/rental/management company has always provided a 1099 showing the (net) rental income that they paid her (they keep a 60% commission/management fee).
In 2020 a new management company stepped in.... and while the deal remains the same they are now sending a 1099 for 100% of the rental income generated by the properties while they remit 40% (she still gets to pay RE tax, repairs and a few other charges.
Not a big deal to expense off the management fees as I did last year...... but she's annoyed and keeps calling them liars, thieves, and crooks.
My pot stirring genes say we'll send them a 1099-NEC but she doesn't actually sent them any payments.....
So, I'll defer to the Brain Trust and settle in for a long long season...........
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I think the real question is whether you can deduct her psychiatrist as a business expense, and if so whether the psychiatrist must be sent a 1099-MISC, Box 6.
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Yeah, I would send one to the shrink before I wasted any time sending one to the management company.
Slava Ukraini!
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IMHO... just cuz the cash didn't physically move, she still paid them.
Send the F 1099 if only to piss 'em off.
60% is highway robbery !
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Do you think they really care if they get a 1099?
Slava Ukraini!
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Maybe, maybe not...
Skylane
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<< Do you think they really care if they get a 1099? >>
Probably not.... unless one fat fingered a few extra zeros
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"Exceptions
Some payments do not have to be reported on Form 1099-NEC, although they may be taxable to the recipient. Payments for which a Form 1099-NEC is not required include all of the following.
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Generally, payments to a corporation (including a limited liability company (LLC) that is treated as a C or S corporation). However, see Reportable payments to corporations, earlier.
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Payments for merchandise, telegrams, telephone, freight, storage, and similar items.
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Payments of rent to real estate agents or property managers. However, the real estate agent or property manager must use Form 1099-MISC to report the rent paid over to the property owner. See Regulations section 1.6041-3(d); Regulations section 1.6041-1(e)(5), Example 5; and the instructions for box 1."
I don't know why she calls them liars. She still reports gross income and lists her expenses, even if no one ever sends a 1099. If she managed the units herself, nothing would change except, perhaps, her blood pressure.
Don't yell at us; we're volunteers
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What was your reason for only reporting the net income on prior-year Schedules E?
The tax is on income, not on pieces of paper.
If IRS looks at ten other owners in the neighborhood and finds them reporting $5,000 a week during the season, what are they going to think about your client reporting only $2,000 ?
And how do they know the "management" expenses aren't being paid to her boyfriend?
Is she claiming a loss on these units? A $10,000 loss looks less suspicious when gross is $100,000, not $40,000.
But the bottom line is still, she's a mental case. Probably abused as a child.
