1099-NEC to a LLC

[dsappenfield12]

How do I report income for a client that was received from his previous employer as a consultant?  He was paid by the previous employer on a 1099-NEC to his LLC that he was told he had to have for the previous employer to pay him for his consultant work. 

[ehill]

Report it on the 1099 NEC and link it to a Schedule C if the llc is a disregarded entity.

[dsappenfield12]

Making sure I explained this correctly... He received the 1099 NEC for the consultant pay from the previous employer that was paid to his newly established LLC.  So he does not report this onto a 1065?  

[ehill]

Is the new LLC a partnership?  That does not sound right if he is just a consultant?

A single member LLC is generally considered a disreguarded entity and goes on schedule C of his 1040.

[dsappenfield12]

No it is not a partnership LLC.  It's just in his name.

[ehill]

Then it is a schedule c on his personal tax return.  As he would have had to elect other tax treatment such as corporation or sub s corporation.

[dsappenfield12]

Thank you for the insight.  I don't think he knew what he was doing by setting up the LLC other than being told to get one so he could get paid. 

[Dusty2]

@dsappenfield12  what type of entity is his LLC?

[BobKamman]

I would consider showing it on a Form 4852 as wages without a W-2, because it smells like the employer just wanted to avoid payroll taxes and thought he would be less likely to be caught if it was laundered through an LLC. But of course it depends on the facts and circumstances, none of which we know here.  

[abctax55]

What state is this in?  CA has really cracked down on this in the last few years.

I agree with Bob.... sniff, sniff, something smells like lutefisk here due to "told he had to create a LLC to get paid".

[dsappenfield12]

It shows on his W-9 Request for Taxpayer ID Number that he selected Individual/Sole Propriertor or single-member LLC.

Speaking with the client he did not even know he could select a C or S corp.