Form 1099

[misskeiko]

Hi,

Does anybody know why there is no need to file form 1099 to corporations? Also, why there is no need to file form 1099 to rental real estate as well?

My client(partnership) sent over a form 1099 MISC he received from a tenant to me. The client is in leasing business. I feel like I do not need it because all the rental income is recorded in QBO. I am a little bit confused when I will need the form 1099 MISC. Could anybody help?

Thank you!

[Just-Lisa-Now- · Accepted solution]

You don't understand when you will receive a 1099 or when you need to issue a 1099?

I wouldn't worry about what you receive, you are required to report all your income regardless of whether you get a 1099 or not....are you looking for the rules as to who do you (or who your business clients) need to send a 1099 to?

[abctax55 · Accepted solution]

Forms 1099-Misc are ISSUED when a entity pays $ 600 out, in a business environment.

Corps (except attorneys) don't get them because the law says it isn't required.  It's a simple as that.

ALL income is reported, whether one receives a F 1099 or not.

The F 1099 amount isn't reported separately anywhere on a tax return.

Those are the basics; go to IRS.gov, search for F 1099 & read more if you are still confused.

Your client's tenant paid your client so s/he issued a F 1099. 

Just make sure the amount is in the *correct* box. 

[misskeiko]

Hi,

I think I understand the general rule for when I need to issue and when will receive. I am looking at the instructions for forms 1099-misc on IRS website. I don't understand why there is no need to report payments to corporations?

[abctax55]

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@misskeiko wrote:

... I don't understand why there is no need to report payments to corporations?

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As I said, that's the law.  Laws don't have to be logical.

[misskeiko]

haha you are right. Thank you!

[Just-Lisa-Now-]

I never understood WHY you don't issue them to corporations either (I guess you CAN, but its not required).  Less 1099s to issue, means less work....Im all for that.

[IRonMaN · Accepted solution]

Because politicians evidently believe all corporations are honest and will report all of their income.  On the other hand, they think everybody else is crooked and wouldn't report a dime of income if it wasn't reported by someone else.

[misskeiko]

This reason is interesting! Thank you.

[abctax55]

I *think* the logic is that Corps often have a fiscal year-end.  F 1099's are done/reported on a calendar year.  Thus matching would be impossible.  There was a discussion about revamping F 1099 so the amounts are shown by month (think F 1099-K) and requiring that they be issued to Corps too.

The discussion went nowhere. 

And this logic ignores the fact that S corps generally have a calendar year-end.

And I think the "logic" that an entity (a Corp) is likely to have a double-entry bookkeeping system so all income is captured.  Not the quotes about the logic of this assumption.

[qbteachmt · Accepted solution]

It helps to remember that a 1099-M form is Informational Reporting. By you reporting this to the entity you paid and to the IRS, now the IRS knows to watch for and expect at least this much info from that entity you reported to/on.

And this is a bit backwards or incomplete: "Does anybody know why there is no need to file form 1099 to corporations? Also, why there is no need to file form 1099 to rental real estate as well?"

Box 1 is Rent, no matter the entity type (corporate or LLC or individual), but it relates to whose income this will be. Rent to a Property Manager is being managed on behalf of Owners. That's why a real estate Management company doesn't need to get a 1099-M for Rent in Box 1 from the tenants. But the same tenants would send a 1099-M to your client, if your client is the owner of the units being rented, and manages their own property.

There is no specific rule for Not issuing to Corporations, so much as there are regulations for each box. For instance, you are supposed to report to Law firms and Accountants, for services, and I would guess this is because the IRS doesn't trust them to report accurately and directly. And medical services are reported, yet many law firms, accountants and medical providers have an incorporated entity.

And while Box 1 and 7 have a $600 minimum for triggering reporting, box 2 for Royalties is $10 or more, not $600 or more.

Of course you have been tracking everything. Using QuickBooks or not, doesn't eliminate the need to follow the reporting requirements. Your bookkeeping doesn't substitute for required reporting; you use it for your reporting, and to confirm what is reported to you.

"My client(partnership) sent over a form 1099 MISC he received from a tenant to me."

Their tenant did the right thing, and your client did the right thing.

You want to read the 1099-Misc instructions. And for this new year, 1099-NEC, as well.

[misskeiko]

wow...thank you so much! Now I totally understand it.