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Category: Finance
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Experience:  Tax professional and business consultant for 35 years.
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We set up a LLC taxed a corporation to handle the properties

Customer Question

We set up a LLC taxed a corporation to handle the properties we inherited from our father. Two of these properties he sold (12-15 months left on the note) with owner financing and the rest are rented (total of 5 properties). How do we report this on form 1120? Do we just report the interest income? I am not sure if we need to file a 1098 on the owner financed properties as we are not a lending institution. We are just seller financing the properties.
Submitted: 1 year ago.
Category: Finance
Expert:  PDtax replied 1 year ago.

Hi from just answer. I'm PDtax. I'll assist.

Expert:  PDtax replied 1 year ago.

Since you transferred the notes and properties to the LLC, the LLC is in the real estate business. The LLC should report its interest income as such on 1120. It should report its rental activity as well.

Issuing a 1098 is also appropriate for your llc seller held note interest.

Thanks for asking at just answer. Positive feedback is appreciated, using the star testing scale. I'm PDtax.