Do We Have to Prepare a 1099???

Discussion in 'Tax' started by BobLeavitt, Feb 1, 2005.

  1. BobLeavitt

    BobLeavitt Guest

    I and my 3 siblings own an apartment house as tenants in
    common - each with an equal ownership interest. A
    management company manages the property, collects the rent,
    pays the bills, keeps a percentage (management fee) for
    themselves and sends the residual to each of us. They also
    keep an additional fee when they rent a vacant apartment.

    Do we have to prepare a 1099 to give to the management
    company in respect of their fees?

    If so - who prepares the 1099 since no one entity owns the
    building? Or does each owner have to prepare a 1099 for
    his/her respective share of the management fees? Also, is
    it a 1099M or some other 1099?

    Thank you for your assistance.

    Robert Leavitt

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    BobLeavitt, Feb 1, 2005
    #1
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  2. BobLeavitt wrote:

    > I and my 3 siblings own an apartment house as tenants in
    > common - each with an equal ownership interest. A
    > management company manages the property, collects the rent,
    > pays the bills, keeps a percentage (management fee) for
    > themselves and sends the residual to each of us. They also
    > keep an additional fee when they rent a vacant apartment.
    >
    > Do we have to prepare a 1099 to give to the management
    > company in respect of their fees?
    >
    > If so - who prepares the 1099 since no one entity owns the
    > building? Or does each owner have to prepare a 1099 for
    > his/her respective share of the management fees? Also, is
    > it a 1099M or some other 1099?


    A 1099-misc is not required, since this is not in connection
    with a trade or business.

    ChEAr$,
    Harlan Lunsford, EA n LA

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    Harlan Lunsford, Feb 3, 2005
    #2
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  3. BobLeavitt

    Marco Folsom Guest

    "BobLeavitt" <> wrote:

    > I and my 3 siblings own an apartment house as tenants in
    > common - each with an equal ownership interest. A
    > management company manages the property, collects the rent,
    > pays the bills, keeps a percentage (management fee) for
    > themselves and sends the residual to each of us. They also
    > keep an additional fee when they rent a vacant apartment.
    >
    > Do we have to prepare a 1099 to give to the management
    > company in respect of their fees?
    >
    > If so - who prepares the 1099 since no one entity owns the
    > building? Or does each owner have to prepare a 1099 for
    > his/her respective share of the management fees? Also, is
    > it a 1099M or some other 1099?


    Oops - I have a somewhat similar situation -

    During 2004, residential real estate owned 75% by a trust
    and 25% split between my brother and I. I don't believe
    that my brother and I, being individuals, have to prepare
    1099s, but does the trust (for which I am trustee) have to
    prepare 1099s for payments made to service providers?

    In the interests of full disclosure, my brother and I are
    beneficiaries of the trust.

    Appreciate any advice. Thanks, Marco

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    Marco Folsom, Feb 3, 2005
    #3
  4. BobLeavitt

    JanZtax Guest

    (JanZtax) asked
    >> Do we have to prepare a 1099 to give to the management
    >> company in respect of their fees?


    and Harlan Lunsford wrote:
    > A 1099-misc is not required, since this is not in connection
    > with a trade or business.


    I don't agree with Harlan. For these purposes, owning rental
    property is considered a business and 1099 forms need to be
    issued to anyone who has provided more than $600 in
    services.

    However, my guess is that the management company will issue
    a 1099 form to you. They've collected the money and needs to
    provide that as an accounting to you (and the IRS).
    Therefore, you don't issue one to them.

    Jan Zobel EA

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    JanZtax, Feb 4, 2005
    #4
  5. BobLeavitt

    D. Stussy Guest

    JanZtax wrote:
    > (JanZtax) asked


    >>> Do we have to prepare a 1099 to give to the management
    >>> company in respect of their fees?


    > and Harlan Lunsford wrote:
    >> A 1099-misc is not required, since this is not in connection
    >> with a trade or business.


    > I don't agree with Harlan. For these purposes, owning rental
    > property is considered a business and 1099 forms need to be
    > issued to anyone who has provided more than $600 in
    > services.
    >
    > However, my guess is that the management company will issue
    > a 1099 form to you. They've collected the money and needs to
    > provide that as an accounting to you (and the IRS).
    > Therefore, you don't issue one to them.


    Also, if the management company is a corporation or
    partnership, they don't need to receive a 1099-MISC (unless
    they double as a law firm).

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    << The Charter and the Guidelines for submitting >>
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    << ------------------------------------------------->>
     
    D. Stussy, Feb 7, 2005
    #5
  6. JanZtax wrote:
    >>> Do we have to prepare a 1099 to give to the management
    >>> company in respect of their fees?


    > and Harlan Lunsford wrote:
    >> A 1099-misc is not required, since this is not in connection
    >> with a trade or business.


    > I don't agree with Harlan. For these purposes, owning rental
    > property is considered a business and 1099 forms need to be
    > issued to anyone who has provided more than $600 in
    > services.


    Quite all right, Jan. I've noticed that the prevailing
    attitude among California preparers seems to be that
    individual taxpayers with schedule e rentals need to issue
    1099-misc.

    An IRS person long ago told me that such rentals were not a
    "trade or business", so I rely on what the instructions for
    1099's say in there handy dandy table towards the back of
    the pamphlet.

    ChEAr$,
    Harlan Lunsford, EA n LA

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    << ------------------------------------------------->>
     
    Harlan Lunsford, Feb 7, 2005
    #6
  7. BobLeavitt

    cccfree

    Joined:
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    Thank you for the information...very relevant to what I'm going through right now
     
    cccfree, Mar 4, 2011
    #7
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