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2 person LLC flipping houses.Bought house 2017.Cost basis =purchase price +expenses n 2017/18?Ordinary inc or cap gain?Investor received money back + 3K. Treatment of 3K?

Forum|Forum|7 years ago
June 5, 2019
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Bought house in 2017 and sold in 2018. Assume I am considered a dealer since flipping houses is why we formed the LLC. thinking this is ordinary income for the LLC to be distributed to the 2 members but want to make sure. Believe the $3K given to the investor is an expense for the LLC (what kind of expense?) and income for the investor. Should I have provided a 1099 to the investor for $3K?

TurboTax Business Windows

Best answer by MichaelL1

It is ordinary income as you are in the business of flipping homes.

Was the investor actually owner some of the company or just gave you a short-term loan and then got some of the profits?

Yes, there should be a 1099 issued and depending on if it was a loan or percentage of profit, the 1099 would be a 1099INT (interest) or 1099Misc.

MichaelL1Answer

Employee

It is ordinary income as you are in the business of flipping homes.

Was the investor actually owner some of the company or just gave you a short-term loan and then got some of the profits?

Yes, there should be a 1099 issued and depending on if it was a loan or percentage of profit, the 1099 would be a 1099INT (interest) or 1099Misc.

J

jdfkinAuthor

On the 1099 it was a percentage of profit. So is it box 3 other income or box 7 non employee comp? Is it too late to issue the 1099misc? Or better late than never?