1099 Misc for items sold to company

[Kea]

Client brought in 1099 Misc with $13,830 in box 7. He says he sold some old, unused computers and electronics to his father-in-law's business. (I guess it was a LOT of stuff!)

It looks like the 1099Misc is in error. It should not go on Sch C. Typically I'd say a sale goes on Sch. D, but since they were personal assets, the loss is not deductible. (I don't have a basis -- but these items depreciate quickly). And since it is on a 1099Misc, the IRS will look for it elsewhere.

Do I show this on line 21? If so, can I show offset with basis (maxed at $13830)? They really didn't "earn" $13K!

It's new to me. Thanks.

[Kea]

help?

[Maribeth]

help?

Well . . . . . you could put the 1099 info on a Schedule C and then back it out with an expense item labeled such as "not in the business of selling stuff". That would take care of the 1099 reporting.

Then show the sale on Schedule D, showing the loss. And then limit the loss on Schedule D to zero.

Maribeth

[Kea]

Seems plausible. It would satisfy the IRS matching computers. Thanks.

But it also seems wrong for the 1099 to have been generated in the 1st place. Can the father-in-law "un-issue" it?

[Margaret CPA in OH]

I don't see why he couldn't issue a corrected one with 0 or Void the issued one. I've done both.

[Kea]

Thanks - the re-issue with $0 sounds easiest.

Just curious, how do you void one?

Thanks!

[Margaret CPA in OH]

In ATX, void isn't possible which is why I suggested the $0, corrected. You can manually prepare a Void by checking the box at the top which says, um, Void. That is, if you have the forms.

[Kea]

Thanks!