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Attorney should get 1099. IN GENERAL, the part for services provided to your client should be on NEC box 1. The settlement portion should be on the MISC, box 10. The amount to include will.depend on how the check was made out. My basic understanding is that if the check was paid to only one attorney, then obviously that attorney gets the 1099 for full amount. If one check is paid to co-payees, I think they each get a 1099 for the full amount. If attorney gets money and part is for co-counsel, then attorney gets 1099 with full amount, and they issue a 1099 for amount they paid co-counsel, but again, that depends on who check is made payable to. There is also the issue on if a settlement is for injury or damages that would be taxable on the recipients end, and again, who check is payable to. I'd suggest start your reading with the article below from the ABA that is written in more layman's language before going to the 1099 instructions for preparation, and then the code . The 1099 instructions do reference the applicable code sections. Also, perhaps a separate post would be better for what.portions of these payments are deductible by your client. Slippery Pencil is correct that attorneys are an exception to the corporate rule. They get 1099s regardless. Anyway, here is the ABA article.to start with: https://www.americanbar.org/groups/business_law/resources/business-law-today/2020-february/irs-form-1099-rules-for-settlements-and-legal-fees/

Entity type doesn't matter for lawyer 1099s.

NY and CT have long battled over who gets to tax the mega incomes of big shots who live in one state and work in the other. For remote workers, NY has a "for the convenience of the employer" test, meaning if you work for a NY firm from your home in another state, you can only avoid NY tax if your employer requires that you work from home. After this passed, CT instituted the same rule for residents of NY (but no other state). I have a client who works for a NY firm from his CT home for her convenience, so she's taxed in NY except paid time off, which is taxed in CT. No kidding.

I wonder why they want to verify income? What kind of business is this? Do they have cash receipts?

You can always ask for more time to complete your response. IRS really does want to work with you, and I've never had them deny such a request. Of course that was when they still had employees....

Cattle prices are up right now. This may be less of an issue until the prices come down. But on the other hand, feed and fertilizer are up as well. Tom Longview, TX

Client got a letter from the IRS that needs to be responded to in 20 days. The letter is dated 4/7/2024. I got the letter today.... The letter asks for "Any Supporting Documents Verifying Income". The client has a Sch. C with 500K of gross income and a loss on the bottom line. At least I did not get it after it was too late to respond. I am blessed that my clients are so thoughtful. 20 days to respond, 20 weeks to get a response back. Anyone taking the under on getting a response before 20 weeks? Tom Longview, TX

If this was my client, I would be asking for an opinion letter from the law firm as to whether these expenses were a business expense or a personal expense?

Yes, that was the issue. I am not sure of all the details but there was another substantial amount that was sent as part of the settlement to pay for the other party's share of the business which was not included in the corporation's books. I am not sure whether any of it should have been, but I still think the fees paid to the attorney should be on a 1099. Unless Mass. lawyers tend to be incorporated.

Also, you need to whom it was rented, a related party or a friend?

Are you saying that the ownership of the corporate stock was at issue?

Sounds like the trucks some of my farmers have pulled up in. No tags, no inspection, and sometimes even no doors!

At least screenshot the tracking showing the first mailing was delivered to the Post Office before the 4/15 date. Once it leaves the taxpayer's hands and is in the custody of the USPS, I think they would have to allow a duplicate submission. You might need to go to a supervisor for that, and you also might need to use the words "Tax Court" to that supervisor. Tax Court would probably find for the t/p and they would also ream out the agent & supervisor who disallowed the re-file due to USPS failure after they have Certified Mail in their custody.

We had that selfsame vehicle as a loaner summer before last when we had car trouble on vacation! Smelled like the chickens it had been recently used to transport, and we called it the Chicken Mobile. Every time you turned it on, a different set of warnings would come up.

CA can take a while. NYS can take a week - and then the acceptance comes back dated the day of submission. Call Drake e-file support if you want them to poke at it. They may have an acceptance that did not get back to you, somehow, or their systems may still show Pending. Can't hurt to ask.

Ask more questions. Every day rented at below market rate is considered personal use, and this may not be a rental at all as far as deductions are concerned. If that is the case, the income becomes ordinary income, deductions evaporate except for those that would be allowed on Sch A.

That just takes you to the Tax Summary form, which, unless it's been seriously updated, does not have anywhere near all of the carryover amounts. I don't have any complex returns so I can't see what is and what is not included.

The business itself.

My client is not using a property management company. He is doing all of the work himself. I have literally hundreds of receipts to prove that. So, I don't doubt that every trip there in 2024 was solely to work on the property. And yes, $1,000 a month seemed low to me as well. Purchase price of the condo (in Florida) was just over $300K. Condo doesn't allow short-term rental. It must be more than 30 days.

thanks Judy for pointing that out--If $2,000 is gross income on 61 rental days...any days where below market rent was charged counts as personal use. If it was available for rent for 61 days, then I'd want to hear a break down of how many nights it was actually rented.

It's starting to sound like your client is trying to bend the rules in his favor, which means that you need to ask more questions and ask for more documentation, just like Judy suggested.

Deductibility depends on the ownership of what?

Is this client using a management/rental agent? If so, those companies usually have a report that shows the actual days rented and the days it was owner occupied. If you can get that, you may be able to see if receipts for fixing up and repair costs match up to any of those dates after it was put in service. If there are no receipts for repair supplies but the report shows owner usage, then what exactly were they doing there? Even something as simple as painting requires materials, but if it is a nice enough property to be rented as a vacation spot that the owners choose to stay themselves, then what would be needed at that point other than routine cleaning or fixing something minor that was broken by a tenant? Are you sure that all of the $75K is furnishings that would allow the bonus depreciation? Is it available for rental this year, or is it already out of service? I also wonder about the $2,000 of income for 61 days of rental. That seems really low to me, but maybe it is your location compared to mine. What kind of property are we talking about here? Are these short-term rentals in a nice vacation area or a more rustic site like a cabin in the woods?

It would have been helpful, if you had included this information in your original post

I have a corporate client that was involved in a lawsuit over ownership. The legal bills were substantial, and the law firm that most of the money was paid to is in Boston. When I told them they needed to do a 1099 for the legal fees, they called the law firm to get the information. The law firm said they had never gotten a 1099. In Virginia, almost all law firms are partnerships so I would think they would be used to getting 1099s from businesses. But maybe it is different in Massachusetts? Or am I missing something about 1099s? Also, when I question this for the 1099s I found out that a substantial portion of the amount they paid the law firm was part of the settlement - they had to pay the other party's legal fees. Should that be included on the 1099? Is it even deductible? Any opinions or references would be appreciated.