I have a client that set up an LLC on 05/05/2020, that we are filing a late 2553 Election. His prior accountant didn't make the election, or really advise him about much of anything except that he should create an LLC.

With that being said, the companies he worked for issued 1099s in his individual name, and not the name of the LLC, which it should have been had his accountant given him the correct advice when mentioning the LLC.

I started working with him about a month ago and he definitely benefits from S-Corp status, filing the late election, and re-categorization of Income to the S-Corp, paying FMV salary, etc. etc.

Since the 1099s were issued to his personal name, and not the LLC, this will create a reconciliation discrepancy with the IRS if we reduce the amounts that should have been attributed to the S-Corp vs. the amounts that would fall under his Schedule C (prior to 5/5/20).

I am considering my options, and I'm unsure if I should understate the amounts of the 1099s on the Schedule C, and include them on the S-Corp return, or, if I should include the full amount on the Schedule C, and take a deduction for the amounts that were included in the S-Corp. The net result is the same, however, this creates a large overstatement of gross income on his Schedule C, and an overstatement of expense, as the amount re-categorized to S-Corp income is a deduction on the Schedule C.

I understand that it would be much better to have the company in question amend and resubmit the 1099s for 2020, but I think it will be highly unlikely we could make this happen.

Any input is much appreciated as I do not want to be too aggressive and lead to issues in the future.