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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 16544
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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My apt building has just been sold and is being converted into

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My apt building has just been sold and is being converted into a hotel. Due to a settlement agreement between the old owner & the City - the tenants have until 2015 to remain before they have to vacate. The new owner is offering the tenants the option of buying them out to vacate early. If a tenant accepts a buyout will they be automatically issued a 1099 for the buyout price? Or is that up to the discretion of the new owner?
Thank you for your question, and thanks for using JustAnswer.com.

If the tenant accepts the buyout they will be issued a 1099 if the payment is in excess of $600. This is not at the discretion of the new owner, as the IRS wants to ensure that income is reported to them. CLICK HERE to read about the rules and requirements.

If you get a 1099 for this purpose, you would put this on line 21 of your income tax return, as "other income."

Please let me know if you need additional assistance. Thanks for using JustAnswer.com and have a happy, and safe, New Years.

** Please take a moment to rate my response as "Excellent" so that I may be compensated for assisting you today. Please let me know if my assistance was anything less than "OK Service", as I am compensated based on whether or not I have assisted you with your issue. If you need further clarifications, PLEASE WAIT TO RATE MY ANSWER UNTIL AFTER RECEIVING FOLLOW UP FROM ME. If I receive anything less than OK Service, I do not get paid. Thank you for your kind understanding in this matter. If you have difficulties rating, then simply respond stating that you are having difficulties rating and thank me for my excellent, good, or ok service and we can get the rating applied by the site*
You should be aware that your question, as with most tax questions, can never really be answered completely...addressing all the permutations; that is because of the many assumptions that have to be made I have done my best to determine what I think you are asking and answering it in the most direct and understandable manner possible. If, however, after reviewing the questions, you have any uncertainties or further questions, please do not hesitate to ask.

Customer: replied 3 years ago.

Is the owner obligated to send both the tenant & the IRS a 1099? What happens if the owner just sends the 1099 to the IRS BUT NOT to the tenant? How could the tenant find out if a 1099 was sent out to the IRS but not to him? Also, what month are 1099s normally sent out?

Thank you for your question. Whether or not you recieve the 1099 shouldn't matter, because you are supposed to claim all income on your taxes, even if no 1099 was issued. If one was issued to the IRS but not you and you did not claim the income, then the IRS would send you a letter asking you to correct the error.

You could find out if a 1099 was sent to the IRS but not you by ordering your income statement from the IRS - but this wont be available until sometime after April 15. The best route is to claim the income on line 21 of your tax return even if you do not receive a 1099.

1099s are usually sent out in January-February of each year for the previous tax year. So, if you received a 1099 for 2012 you would get it in January/February 2013.


** Please take a moment to rate my response as "Excellent" so that I may be compensated for assisting you today. Please let me know if my assistance was anything less than "OK Service", as I am compensated based on whether or not I have assisted you with your issue. If you need further clarifications, PLEASE WAIT TO RATE MY ANSWER UNTIL AFTER RECEIVING FOLLOW UP FROM ME. If I receive anything less than OK Service, I do not get paid. Thank you for your kind understanding in this matter. If you have difficulties rating, then simply respond stating that you are having difficulties rating and thank me for my excellent, good, or ok service and we can get the rating applied by the site*
You should be aware that your question, as with most tax questions, can never really be answered completely...addressing all the permutations; that is because of the many assumptions that have to be made I have done my best to determine what I think you are asking and answering it in the most direct and understandable manner possible. If, however, after reviewing the questions, you have any uncertainties or further questions, please do not hesitate to ask.

Megan C and other Finance Specialists are ready to help you
Customer: replied 3 years ago.

If the IRS sent me a letter asking me to correct the error, would I be acessed penalities and how much would they be?

You would be assessed penalties and interest, and if you knowingly left the income off, you would be committing a criminal offense.

The underpayment penalties depend on the amount of income you left off. However since you have the income and know about having to claim it, I wouldn't leave it off.

Please let me know if you need anything additional. Thanks again for using JustAnswer.com and have a happy, and safe, New Years.

** Please take a moment to rate my response as "Excellent" so that I may be compensated for assisting you today. Please let me know if my assistance was anything less than "OK Service", as I am compensated based on whether or not I have assisted you with your issue. If you need further clarifications, PLEASE WAIT TO RATE MY ANSWER UNTIL AFTER RECEIVING FOLLOW UP FROM ME. If I receive anything less than OK Service, I do not get paid. Thank you for your kind understanding in this matter. If you have difficulties rating, then simply respond stating that you are having difficulties rating and thank me for my excellent, good, or ok service and we can get the rating applied by the site*
You should be aware that your question, as with most tax questions, can never really be answered completely...addressing all the permutations; that is because of the many assumptions that have to be made I have done my best to determine what I think you are asking and answering it in the most direct and understandable manner possible. If, however, after reviewing the questions, you have any uncertainties or further questions, please do not hesitate to ask.
Thank you for the positive rating. Please remember me the next time you have a question. Simply enter "MyVirtualCPA" in the subject of your question, and it will be routed directly to me. Thank you again for using JustAnswer

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