new tax question

[faithnlve]

What is the name of your state? vt. If someone says to you (your a partner of an LLC)...."Hey, you know that 500.00 you owe me? Well, I will forgive you the money you owe me IF you sell me your partnership of your business for 1000.00. You agree to it. Then the following tax year you get a 1099 for 1500.00. You call the guy he says he did a boot on the 500 since it was part of the deal with the 1000.00. I pay taxes on it, he doesn't. something wrong here? Thanks

 

[tranquility]

I'm not sure about the 1099, but you did realise $1,500 on the sale. Reduce this by your basis and report it on Schedule D.

 

[LdiJ]

I'm not sure about the 1099, but you did realise $1,500 on the sale. Reduce this by your basis and report it on Schedule D.

I am sure about the 1099. He personally bought your shares from you for 1500.00. He has no right to have the LLC issue you a 1099. I agree that you have to report the sale of your shares on schedule D.

 

[faithnlve]

I am sure about the 1099. He personally bought your shares from you for 1500.00. He has no right to have the LLC issue you a 1099. I agree that you have to report the sale of your shares on schedule D.

The 1099 has it written up as shares too. I don't get that one either, since when I was owner it was a partnership, and the new owners re-organized Jan 2007 to an S corp. So can he file it as shares? I was 25% owner. thanks again

 

[tranquility]

Stop worrying about the 1099, it is irrelevant to what you need to do.

 

[LdiJ]

Stop worrying about the 1099, it is irrelevant to what you need to do.

Yes, its irrelevant to what she needs to do, but it still will be problematic when the IRS starts matching things up.

 

[tranquility]

While I think the issuer is not a broker, the 1099 is probably a 1099-B. Sales of this type can properly be reported on such a document rather than filing the "substantial change" report (whatever number that is). What shall we do with such a 1099?

 

[LdiJ]

While I think the issuer is not a broker, the 1099 is probably a 1099-B. Sales of this type can properly be reported on such a document rather than filing the "substantial change" report (whatever number that is). What shall we do with such a 1099?

I would just about guarantee that its not a 1099-B. Its her brother who bought out her share of the LLC. He is trying to charge all kinds of things to her on 1099-Misc's, most of which are apparently bogus or at least very questionable.

 

[tranquility]

When I look at the posting history, you may be right. A 1099-B may be appropriate, others would not. I'd put a statement of the facts on the back of the return explaining the 1099 and wait to see what happens.

 

[TinkerBelleLuvr]

Faith: did you pony up money for this partnership? Or was your contribution to the partnership your time? It is relevant if this is/should be a 1099-B since it's a matter of deciding how much of a capital gain/loss and whether is is long/short term.

 

[faithnlve]

Faith: did you pony up money for this partnership? Or was your contribution to the partnership your time? It is relevant if this is/should be a 1099-B since it's a matter of deciding how much of a capital gain/loss and whether is is long/short term.

My 25% of partnership was given to me from another owner. I did not have to invest anything financially, but, did put many weeks of my time into the business prior to opening. My brother wanted my 25% and made me an offer. His offer, the money I owed him (car loan) he would forgive IF I sold him my 25% for 5000.00. The 1099 he sent totaled 8500.00 as 250 shares. My brother said he could legally boot in the money he forgave me too. My husband and I filed it the way it was and paid the taxes. My husband doesn't think what my brother did was legal. I said why worry about it, we paid the taxes, we are covered. My husband wants me to report my brother to the IRS for fraud based upon the agreement of him forgiving my owing him money (car) if I agreed to sell my 25% of ownership of LLC to him. Now this all happened last year. I have not worked for the company since then other than I did volunteer 2 nights this past summer. Well, my brother sent me another 1099 misc this year for over 4000.00. I told him he is crazy!! He said deal with it. So now my husband is ready to either knock his head off, or if I do nothing walking out until I do. I am sick over this whole mess. I hate the greed of my brother, but he is still my brother. More importantly though I don't want my hubby walking out the door . Understandably my hubby is sick of my brothers dealings with money and business. My hubby thinks he will end up in jail due to all his shananagins. Please help. Thanks.

 

[LdiJ]

My 25% of partnership was given to me from another owner. I did not have to invest anything financially, but, did put many weeks of my time into the business prior to opening. My brother wanted my 25% and made me an offer. His offer, the money I owed him (car loan) he would forgive IF I sold him my 25% for 5000.00. The 1099 he sent totaled 8500.00 as 250 shares. My brother said he could legally boot in the money he forgave me too. My husband and I filed it the way it was and paid the taxes. My husband doesn't think what my brother did was legal. I said why worry about it, we paid the taxes, we are covered. My husband wants me to report my brother to the IRS for fraud based upon the agreement of him forgiving my owing him money (car) if I agreed to sell my 25% of ownership of LLC to him. Now this all happened last year. I have not worked for the company since then other than I did volunteer 2 nights this past summer. Well, my brother sent me another 1099 misc this year for over 4000.00. I told him he is crazy!! He said deal with it. So now my husband is ready to either knock his head off, or if I do nothing walking out until I do. I am sick over this whole mess. I hate the greed of my brother, but he is still my brother. More importantly though I don't want my hubby walking out the door . Understandably my hubby is sick of my brothers dealings with money and business. My hubby thinks he will end up in jail due to all his shananagins. Please help. Thanks.

I wish you would give real numbers and real scenarios when you post questions. You will get better answers.

I agree that your brother purchased the shares from you for 8500.00. It was 5000.00 in cash and 3500.00 in debt forgiveness. I do not believe that it was proper for him to give you a 1099, particularly a 1099 from the LLC, but if it was a 1099-B and you reported the income on Schedule D, then it was fine. Otherwise, you need to amend your return for that year, with the help of a tax pro.

Now, in order to help you with this year, we need to know EXACTLY what kind of 1099 you received, and EXACTLY why your brother is claiming that you received 4000.00 in benefit or cash from the LLC.

You can't give us hypothetical situations and get valid answers. We need specific details.

 

[tranquility]

That's what I noticed in other threads, the facts seem a bit fuzzy and much effort is wasted. I thought I was done with the thread until LdiJ's comment. With that I say, I agree with her. And, because of the fuzzy facts I don't think I'm going to play anymore even if a spreadsheet filled with details shows up.

 

[faithnlve]

I wish you would give real numbers and real scenarios when you post questions. You will get better answers.

I agree that your brother purchased the shares from you for 8500.00. It was 5000.00 in cash and 3500.00 in debt forgiveness. I do not believe that it was proper for him to give you a 1099, particularly a 1099 from the LLC, but if it was a 1099-B and you reported the income on Schedule D, then it was fine. Otherwise, you need to amend your return for that year, with the help of a tax pro.

Now, in order to help you with this year, we need to know EXACTLY what kind of 1099 you received, and EXACTLY why your brother is claiming that you received 4000.00 in benefit or cash from the LLC.

You can't give us hypothetical situations and get valid answers. We need specific details.

He sent me a 1099 misc (unemployee compensation.) for 4000.00. My hubby and I did our taxes in February, but my brother sent me this 1099 misc March 3rd. I have no darn clue why he thinks or thinks he can claim I recieved 4000.00 since I never received a dime. I volunteered two nights in June of last year, and did not work any other time. This is the problem. I have a jerk for a brother. He is a money greedy, con artist.