1099-Misc reimburse question

USA Discussion in 'General Tax Discussion' started by iron190, Jan 15, 2019.

  1. iron190

    iron190

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    Hi Everyone,

    Thank you for taking the time to answer this question, as I can't seem to find it anywhere.

    Example for the question:

    We will use two parties. Scott and the LLC. Scott is working on a project and is not getting paid for his services by the LLC for this project. Let's say that Scott is proving himself to the LLC before they become partners. Scott is spending money on hiring engineers, buying materials, etc. Then each month Scott sends an invoice with receipts to the LLC so he can get paid back for these items. The LLC pays him back each time after receiving an invoice along with the receipts. Again, Scott is not receiving any type of fee for his time or work, just the amount for what he spent on the project.

    Does Scott need to be 1099d assuming he is not an S or C corp? Or is the LLC supposed to 1099 the people he paid? Or does the LLC not send a 1099 at all and Scott is supposed to 1099 the vendors he paid?

    Thank you!
     
    iron190, Jan 15, 2019
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  2. iron190

    kirby VIP Member

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    See IRS regulations 1.6041-1 (e). It says if Scott does more than just make payments then the LLC has to send him a 1099 and then Scott sends out the 1099s to the vendors. Per your description, Scott does more than just making payments.
     
    kirby, Jan 16, 2019
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    iron190 likes this.
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  3. iron190

    iron190

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    Thank you
     
    iron190, Jan 16, 2019
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