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PDtax
PDtax, CPA firm owner
Category: Tax
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Experience:  32 years tax experience, including four years at a Big 4 firm.
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Now the LLc is doing some property investment business, buying

Resolved Question:

Now the LLc is doing some property investment business, buying distrsed properties, remodellimg them, finding investors and share profits with them. For some of the properties sold they received 1099 and shared profit with other indivisdal investors. How do we report this investment income while doing a partnership return, report it on sch D ot just report it as income in the income section.
Submitted: 2 years ago.
Category: Tax
Expert:  PDtax replied 2 years ago.

PDtax :

Welcome to the site. I will be helping you today.

PDtax :

since your income centers around the sale of properties, I would report the gross income as sales income, and the expenses, including cost of goods sold, etc. on the face of the 1065 with a schedule of other expenses to list our the remaining expenses. Your business is not earning investment income (interest or dividends), but instead profits from the sale of properties. That is your main business. But I think your question centers around joint ventures with other investors, for which you are paid a commission, and receive 1099.

PDtax :

The 1099 income can be reported as other income on the face of the 1065, not as sales income. Disclose the matching to the 1099 in a support schedule, and you will report the income (and match to the 1099 so IRS can easily see the match) and report your venture income with your operating income to your owners.

PDtax :

Thanks for asking at Just Answer. Please leave positive feedback if I have answered your question. If you need anything more, please ask.

Customer:

Although they were providing consulting services, but in order to secure their profits, the LLC was listed on the title, my only concern is to Sch D, shold we use it or just report the income on a separate statement with the breakdown,

PDtax :

If your piece of the sale came from closing, but it was for services, then reporting the income as I suggest is correct, with a separate attachment showing the 1099 matching. Explain on the statement that your 1099 income was for services, but was remitted at closing, which will explain the 1099.

PDtax :

I see you are in chat. Good morning.

PDtax :

Do you need anything more?

Customer:

Fine for the 1099. the other income which is not reported on the 1099 will be also reported on the face of 1065 with breakdown.

PDtax :

yes.

Customer:

Thanks

PDtax, CPA firm owner
Category: Tax
Satisfied Customers: 2105
Experience: 32 years tax experience, including four years at a Big 4 firm.
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PDtax
PDtax
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32 years tax experience, including four years at a Big 4 firm.