Taxpayer asks:
I am a sole prop and paid rent to an accountant who is a professional corporation. Do I need to 1099 him?
Taxgirl says:
No, you generally don’t issue a form 1099 for rental payments made to corporations (there are some exceptions). For more on when a form 1099 might be appropriate, check out my prior post about when to issue a 1099.
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
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I’ve received a couple of follow-up questions to this post so I wanted to post a bit more…
Payments made for rental payments are not reportable on a form 1099-MISC if paid to a corporation or to a real estate agent. You may need to report rental payments made to an individual or partnership. However, a PC or other corporation in the name of an individual, as above, is not considered an individual for this purposes.
You do not need to report personal/residential rental payments (ever) on a form 1099-MISC. Only those payments associated with your trade or business are reportable.
I received another question re rents and LLCs. I didn’t want to create a separate post for it so I thought I’d tack it on here…
An LLC can be a partnership, corporation or single member LLC (disregarded entity). LLCs which are corporations would not receive a form 1099-MISC for rents. LLCs which are taxed as a partnership or as a disregarded entity may be subject to a form 1099-MISC. Check the form W-9 if you’re not sure. If you don’t have one and you’re concerned, then issue the 1099-MISC. It can’t hurt.
Remember, however, that this applies to commercial/business rentals only. I keep getting questions about personal/residential rentals – no, no, no. You don’t need to issue a form 1099 for those.
The compnay paid the rent to commercial property owner who is also the S corp owner and employee. Does the company need to issue 1099 to the owner(employee)?? The owner did report the rental income in 1040 without the 1099.
Thank you very much for the help
If the Company is paying a landlord for executive housing for those executives that do not live in the corporate city, does the company issue the 1099-Misc to the landlord (who is not a corp or a real estate agent)? Does the answer to this question depend on whether the company is incurring this expense or whether they are then taxing this benefit to the executive?
Thanks!
-accountant in Tempe