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.
State/Country relating to question: New Jersey
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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.
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.
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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,
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.
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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.
30 years tax experience.