Lee B Posted January 25, 2019 Report Share Posted January 25, 2019 SMLLC, a disregarded entity, engaged in a combination of real property investment and commercial rentals, who regularly borrows unsecured funds from 2 individuals for both operating and investment purposes. His main source of income is employment/part owner of a Structural Engineering Firm. Since his real estate activity doesn't rise to a trade or business level, my tentative conclusion is that he is not required to issue 1099 INTs ? Quote Link to comment Share on other sites More sharing options...
ILLMAS Posted January 25, 2019 Report Share Posted January 25, 2019 A bank would normally issue a .64 cents 1099-int, it would probably be a good idea to issue one if he indeed paid interest, I would say no if the interest is being accrued and not paid. Quote Link to comment Share on other sites More sharing options...
EricF Posted January 25, 2019 Report Share Posted January 25, 2019 I agree that Form 1099-INT is not required to be issued by a payer unless that payer is paying the interest in the course of his trade or business. No trade or business, no 1099-INT requirement. 1 Quote Link to comment Share on other sites More sharing options...
BulldogTom Posted January 25, 2019 Report Share Posted January 25, 2019 Doesn't the fact that he registered an LLC with the state provide de facto evidence that he has a business? Why else would you create an LLC if not to conduct business? Not arguing, just asking. Tom Modesto, CA 1 Quote Link to comment Share on other sites More sharing options...
EricF Posted January 25, 2019 Report Share Posted January 25, 2019 LLCs are created for all kinds of purposes other than to conduct business. The main purpose of an LLC is to attempt to shield an owner from liability for what is in the LLC. LLCs are formed to hold property and ease gifts of shares of that property to family members. That can be done with real estate or other investments. 2 Quote Link to comment Share on other sites More sharing options...
RitaB Posted January 26, 2019 Report Share Posted January 26, 2019 19 hours ago, cbslee said: SMLLC, a disregarded entity, engaged in a combination of real property investment and commercial rentals, who regularly borrows unsecured funds from 2 individuals for both operating and investment purposes. I would consider this activity a business and issue the 1099s. 4 Quote Link to comment Share on other sites More sharing options...
BLACK BART Posted January 26, 2019 Report Share Posted January 26, 2019 20 hours ago, EricF said: LLCs are created for all kinds of purposes other than to conduct business... They certainly are. A few years ago the proprietor of Elmo's Alternators brought me his usual cardboard box full of gas tickets, bank statements, deposit slips, Burger King receipts, invoices, a half-eaten sandwich, and beaucoup wadded-up Walmart tickets (normal fee's $225, but $500 for him since I have to pay a girl to unroll and iron the Walmart tickets flat enough to add up). Noting the new name (Elmo's Alternators, LLC) on an invoice, I said "El; this might complicate things; did you take on a partner or do anything new?" "Not a thing," he replied, "but everybody's doin' it. It sounds better!" 2 2 Quote Link to comment Share on other sites More sharing options...
JohnH Posted January 26, 2019 Report Share Posted January 26, 2019 One of my clients said her son formed an LLC for his painting business because it limited his liability for taxes. All he had to do was file a piece of paper with the Secretary of State. He told her once the LLC was formed, he didn't have to pay tax on any of his income. After an embarrassing period of silence accompanied by my "deer in the headlights" look, I changed the subject. 1 3 Quote Link to comment Share on other sites More sharing options...
Catherine Posted January 26, 2019 Report Share Posted January 26, 2019 I had someone tell me that he'd been told that as long as he left the money in his SMLLC and did not send himself a 1099, none of the money was taxable. He said a CPA had told him that! Either there was a HUGE misunderstanding somewhere (possible), or the guy giving info wasn't a CPA (possible), or he was selling/giving the kind of tax "advice" that lands the listeners into long-term opportunities to wear orange jumpsuits (also quite possible). 4 Quote Link to comment Share on other sites More sharing options...
Randall Posted January 27, 2019 Report Share Posted January 27, 2019 On 1/25/2019 at 1:16 PM, ILLMAS said: A bank would normally issue a .64 cents 1099-int, it would probably be a good idea to issue one if he indeed paid interest, I would say no if the interest is being accrued and not paid. I thought banks only issued 1099-INT if the amount was $10 or more. 1 Quote Link to comment Share on other sites More sharing options...
Catherine Posted January 27, 2019 Report Share Posted January 27, 2019 6 hours ago, Randall said: I thought banks only issued 1099-INT if the amount was $10 or more. Depends on the bank. I've seen them for forty-eight cents (less than the cost of the stamp to mail the form). Most of them skip it until the $10 threshold kicks in - but not all of them! 1 Quote Link to comment Share on other sites More sharing options...
Gail in Virginia Posted January 28, 2019 Report Share Posted January 28, 2019 22 hours ago, Randall said: I thought banks only issued 1099-INT if the amount was $10 or more. It is my understanding they are not required to until the amount reaches $10, but many of them find it easier to issue them to every one with interest instead of sorting to only send those that are necessary. 2 Quote Link to comment Share on other sites More sharing options...
ILLMAS Posted January 28, 2019 Report Share Posted January 28, 2019 On 1/27/2019 at 9:43 AM, Randall said: I thought banks only issued 1099-INT if the amount was $10 or more. You might be on to something, I believe one of my client received a brokerage statement with a .64 cent 1099-Int. Quote Link to comment Share on other sites More sharing options...
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