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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 12175
Experience:  Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
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Hello. In general, my income is not high enough to owe taxes.

Resolved Question:

Hello. In general, my income is not high enough to owe taxes. For four years I held on to a gas royalty check for a considerable sum (enough to have to pay income tax), having it re-issued each year, until cashing it in 2012. As a result, the gas company issued 1099's showing that income each year, as if I received that income 4 times, instead of once. The IRS now believes that I owe more taxes than I do and is asking for my returns for those years. My understanding is that I was to declare that income the first year, when I first received the check. However, I believe it would actually work out better for me to declare it for 2012, when I actually cashed the check. Do I have a choice? If so, which year should I declare the royalty income? What would be the best way to handle this? How do I go about getting new, corrected 1099's? It is my understanding that 3-year income averaging (which would benefit me) has been disallowed since 1980's...is this correct? I believe I need to revise previous years' returns, and have yet to file 2012 (asked for extension). Thank you for your attention and assistance.
Submitted: 1 year ago.
Category: Tax
Expert:  Megan C replied 1 year ago.

MyVirtualCPA : Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.
MyVirtualCPA : You would owe tax on this the first year you got the check.
MyVirtualCPA : You will need to show the IRS that you only received the amount once, perhaps by showing the correspondence you had with the gas company where you asked for a check to be reissued.
MyVirtualCPA : Income averaging is disallowed.
MyVirtualCPA : You pay tax on income when you have access to it. You had access to this first four years ago
MyVirtualCPA : Is there anything else that I can assist you with today? If not, please rate my response Excellent so that I may receive credit for assisting you today
Customer: Very helpful. Is it possible to get 1099's re-issued with corrections? And is the company required to do so if requested? There was no correspondence with the gas company, as it was done by phone. Thanks.
MyVirtualCPA : You can get a 1099 corrected. They will send the 1099 form to the government, and check the box which says "corrected" - however there's no requirement that they do this. It's just good business practice.
MyVirtualCPA : Is there anything else I can help you with today?
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 12175
Experience: Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
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