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March 13, 2020
Question

My wife had ~1% equity ownership in a company that was sold in 2018 and she received $11k in 2019 related to the sale, reported on 1099-MISC.

  • March 13, 2020
  • 1 reply
  • 0 views

Turbo tax seems to move this income to Schedule C but this isn't profit (or loss) from business operations.  It's a result of her equity/ownership in the company that was sold.  It feels like I'm not filling out the 1099-MISC questions appropriately but would appreciate advice on how I need to report this in Turbo Tax.

 

Thanks,
Josh

    1 reply

    Carl11_2
    Employee
    March 13, 2020

    Keep that 1099-MISC *forever*, because for that amount chances are high that you will be audited on it 24-36 months after filing it. Might want to include with it a write-up on what it's for, and add to it any and all paperwork showing her buy-in to the company. In my personal opinion, with an $11K 1099-MISC that you are claiming is not self-employment income, you best be able to prove it in a tax court if it ever came to that. (I doubt it would though.)

    Reporting 1099-MISC (box 3 or box 7) that is not self-employment income

    Under the Wages & Income tab (or Personal Income tab) scroll down to Other Common Income and elect to start/update Income from form 1099-MISC. Then click YES to indicate you have a 1099-MISC.

    Enter the 1099-MISC exactly as printed, and then Continue.

    Enter the reason you got this money – be it scholarship, bonus, streaking butt naked across the 50 yard line of the super bowl, whatever. Then continue.

    Select None of these apply, then Continue.

    Select No, it didn’t involve work….. and Continue.

    Select ONLY the tax year for which this specific 1099-MISC was issued. Do not select the year that you received the 1099. Select the year for which the 1099-MISC was issued. Select no other year. Then Continue.

    Select No, it didn’t involve an intent to earn money, then Continue.

    Select NO, then Continue.

    Click the DONE button, and that does it.