Should sole proprietors required to file 1099INT for interest they pay on a land contract

Forum|Forum|5 years ago
April 19, 2021
3 replies
33 views

Sole Proprietor purchased real estate for its business on land contract. Does it have to file 1099INT for the interest it pays the individuals who hold the land contract?

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qbteachmt

Level 15

Guess what? The IRS knows "who must file:"

https://www.irs.gov/instructions/i1099int

Don't yell at us; we're volunteers

PATAX

Level 12

👍 great question SMF... I just checked on the IRS website, I think it is the same link that qb is referencing, and there are many different rules there... In any event , whether it is reported or not, the recipient should pick up the interest income on their tax return from the installment sale... Just my opinion

qbteachmt

Level 15

"and there are many different rules there."

Exactly. Read all the variables, so that you determine which apply to the scenario for this taxpayer, and that helps you see if it meets the reporting threshold.

Example: buying land adjacent to the Marina your client operates for better access and more parking spaces, and paid $600 or more interest this year to the seller = Business property.

Example: buying an empty lot from the sister-in-law because one day, I might build a home with a boat shop on it, and paid her more than $600 in interest this year = does not meet the reporting requirements.

Too many variables for strangers on the web to direct you.

Don't yell at us; we're volunteers

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