Spouse filing MFS issued 1099 from husband's business

[David]

TP is filing MFS and going through a separation and or divorce.

Husband owns a SMLLC and issued his wife a 1099 because he says she benefited from the earnings from the business.

She did not work for the business. The business is electrical services.

I am planning to report the 1099 on her Sch C and back it out under other deductions with a description "Fraudulently filed 1099-MISC".

Has anyone ever had this situation? Is this the best way to handle this or is there a better way?

Thanks.

[Abby Normal]

Sounds good to me.

[jasdlm]

I have had this situation.  I live in a relatively small town, so I contacted the husband's preparer and got a 1099C issued (after preparer talked with husband).  Might not be able to get away with that where you are, but I had my client's permission, and I did not ask the other preparer for any information; just provided him with information (i.e. bogus 1099 equals bogus deduction).

[MsTabbyKats]

I would back it out...but not with "fraudulently filed....."

 

I'd say "Taxpayer claims she did not work for or receive funds from this company in 2014"

 

Two sides to every story....you don't know the husband's side.

[Terry D EA]

I have to agree with MsTabbyKats. There are two sides to the story and we usually only hear one side an it is sometimes difficult to remain impartial. These type of clients can definitely pull on some heart strings. I had one this year that blasted the spouse every chance they got. Had to remain impartial simply as is stated I didn't nor do I know the other side of the story.