Do I issue 1099MISC to contractors paid in 2016, for tax year 2016 even if I am not claiming the income from the 1099S until 2017?

Forum|Forum|7 years ago
June 1, 2019
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We purchased a home in February, 2016 to flip and sell. We did not close until January, 2017 and will not receive the 1099S until next year for the 2017 tax season. Do I need to issue the 1099MISC to the contractors for the 2016 tax year, as we paid them in 2016? Also, can I wait to include all expenses on the property when i claim the income in 2017 or do they need to be added the year I purchased them?

TurboTax Home & Biz Windows

O

Opus 17

Employee

If you are required to issue a 1099-MISC, it must be issued in the year that you actually paid the contractor. You only need to issue a 1099-MISC if you are a business that paid a person. You don't need to issue a 1099-MISC if you are a person, or if you are a business who paid another business. (Although you can voluntarily, you are not required.)

Expenses to repair and improve property for a flip are not deductible. Expenses to repair are not deductible at all. Expenses to improve are added to the cost basis and reduce your capital gains when you sell but they are not a deductible expense against income.