Allocating a 1099-K

[JudyB]

A client went from Sole Prop to LLC. In 2019.   Her 1099-K combined all credit card transactions.   Obviously cc charges were received in her bank account of the sole prop as well as later in the year in her LLC.  1099-k is issued to her LLC.  EIN.

WHAT IS THE CORRECT WAY TO  represent htis on her return

[dkh]

Is this a single member LLC ?   If yes, it's still reported on a Schedule C just add  LLC name and EIN,  report same as you would have if it was sole prop.

[Just-Lisa-Now- · Accepted solution]

What kind of LLC?   

If its a single member thats disregarded for tax purposes, it all goes on the Sch C of the 1040 with the taxpayer SSN...so it doesnt really matter.

Or is this a multi member LLC, or one thats elected to be taxed a  corporation and files a different enity return (1065, 1120s, etc)?

[JudyB]

Thank you .  One more question.   Client received  multiple1099-misc for payments and some were made by credit card, so there is duplicate income reported.

how should that be handled.  I inherited this.

thanks

[Just-Lisa-Now-]

Im guessing they also got income that wasnt reported on either 1099K or 1099MISC so we cant just rely on these statements for business income....do you have bank statements or some kind of record of total income received?

[JudyB]

yes I have the total bank account income received and will work around that I guess.  

[qbteachmt]

"Client received multiple1099-misc for payments and some were made by credit card, so there is duplicate income reported."

Neither the 1099-Misc or 1099-K is the business income to report for taxes.

1099-Misc is only issued by those clients who paid your client $600 or more. Your client can have had $2m in income from so many clients, that none of them had to pay $600 or more, so there would be No 1099-Misc issued by anyone. You still report the $2 million, of course.

1099-K is a Payment Settlement reporting entity that has handled Money; this is more like Banking, not sales or income. For instance, a Landlord might have a lot of 1099-K activity for Rental Deposits, which is not income.

Income is the business activity as a whole.