How to report an incorrect 1099-S sent to LLC?

Forum|Forum|3 years ago
February 2, 2023
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I have a single member LLC & work in the real estate field. Besides being a realtor, managing properties, etc, I also flip 1-2 houses per year. I received a 1099-S for the most recent flip from the title company. It had my LLC name on it & the LLC's TIN. The amount on it in box 2 under gross proceeds was $850,000. There was another individual investor who went in on this property with me so at closing so I didn't receive the entire $850k. My portion was $280,546.41. This amount went to cover the principal I paid to purchase the property and some of the repairs on the property that I paid for.

Questions....

1. Should I have the title company re-issue the 1099-S with the correct amount? I already asked them to do it & they said that I just need to report what I received at closing & attach a letter with my taxes explaining what happened along with a paper trail showing I only received the $280,546. Is this correct or do I need to get them to correct it?

2. Where would I report the 1099-S on my taxes? When I am using TT Home & Business, I go through all of the categories in the business section but I don't see where to enter a 1099-S. I only see a place to enter 1099-MISC. If there isn't a specific place to enter it like there is with a 1099-MISC, how will the IRS know that I have reported it?

3. Where would I enter in my expenses that I paid to update the property including the utilities paid during the remodeling process, expenses to stage the house when it was listed, etc?

4. Since the LLC is a single member, should I report it under my LLC or my own SS # to get the best break on taxes?

Thanks in advance!

Not A Product Question

MAK70

It is always difficult to get a title company reissue the 1099-S. Your situation sounds like it may be a co-ownership rather than a partnership but there are not enough details and we do not give legal advice. Because you received the 1099-S you will be responsible for reporting it. Usually, the taxpayer's social security number is used if a single-member LLC (See Single Member Limited Liability Companies). You would report the income as Investment Income (like the sale of a second home) or if you have the business set up as a Schedule C, it would be the sale of Business Asset. If it is sold as an investment, you would add the reno costs as adjustment to basis, if reported on a Schedule C, they may be expenses or assets (if they need to be depreciated). I'm going to link you to How do I report the sale of a flip house?- and @GeorgeM777 is till here so you can tag him if you have questions he may be helpful with.

It would be best to report the $850,000 as the proceeds of sale, then add as a miscellaneous expense (and be mindful if you are required to issue a 1099-MISC (see Video: When to Issue a 1099-MISC Tax Form - TurboTax - Intuit) to the co-owner) the amount he received at closing.

Because you are an SMLLC, there is no tax advantage one way or the other (it is the purpose of the SMLLC).

To summarize: you must first determine if you had a Schedule C business or sold as an investment, this will determine how to report. Please add to this post if you have more questions.