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Compensation to Officers Line 12 form 1120 vs 1099 DIV and 1099 NEC

Level 3

New client, prior year Corp return had $36k in line 12 of 1120 form.  His previous accountant reported the $36k (from line 12 -1120 form) on his personal return under Schedule C (line 1)and added some additional expenses on personal level.

I am not very familiar with this as I have only a couple of business clients who are usually either on payroll or issue a 1099 NEC for themselves (as owners).


Is it correct to just transfer the amount from form 1120 (line 12) to schedule C (line 1) or should i issue a 1099 DIV? 


Can i include expenses under a 1099 DIV?


thank you all.

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4 Comments 4
Level 15

No.  I think it's safe to say that the prior preparer didn't have a clue what they were doing.

Slava Ukraini!
Level 3

Thank you.  Should I issue a 1099 DIV? these are payments that he took out as cash from the ATM.

I was thinking about issuing a 1099 NEC but i dont know if i would be able to include this amount in line 12 of form 1120.

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Level 13

Run, don't walk, to the nearest exit.  Corporate employees get a W-2, not an ATM card.

Level 15

Does your taxpayer work for the corporation, or is only a Director? Director pay isn't the same as being an employee.

1099-Div = not deductible for the C Corp, reportable (like an investment) for the shareholders (you only told us this is an officer)

1099-NEC = when this is a vendor (supplier of goods and/or services) to this C Corp being paid, by running a different company that is a sole proprietorship. Directors (not working for the corporation) also get a fee reported on 1099-NEC.

"who are usually either on payroll"

Yes, that is the requirement for Corporations, they are an employee to their entity.

"or issue a 1099 NEC for themselves (as owners)."

No one is ever issued a 1099-NEC from their own entity, as owner, for the work they did related to that entity. When you see this, it's someone trying to bypass something required or simply doing it wrong.

See the IRS references:


There is Sole Prop, not 1099-NEC and no payroll. There are partnerships (Form 1065), no 1099-NEC and no payroll for the partners. There are corporations (or electing to be treated as a corporation) and that = payroll if you are working. Shareholder dividends is it own topic, for C Corp.


"Level Up" is a gaming function, not a real life function.
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