1099 For Corporation Bookkeeping Question

by Debbie Young
(Laguna Niguel, CA USA)

Corporate Culture

Corporate Culture

I have a client who operates a corporation engaged in rental property management.


The officers of the corporation do not receive a wage but instead derive their income from the rental properties.

In this scenario, it is essential to determine whether the officers of the corporation are required to receive a 1099 form for the rental income they receive.

Can you please clarify the tax reporting obligations for the officers of the corporation regarding their rental income and whether they need to issue 1099 forms?

Additionally, any insights on the relevant IRS guidelines or regulations applicable to this situation would be greatly appreciated.

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Jul 17, 2023
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starstarstarstarstar 		Corporate Culture
by: Stephanie

In general, officers of a corporation who receive rental income from properties owned by the corporation are not required to receive a 1099 form for that rental income.

The rental income received by the officers would typically be reported on the corporation's tax return rather than on individual 1099 forms.

However, it is always recommended to consult with a professional who can provide specific guidance based on the unique circumstances of the corporation and its officers.

They can help ensure proper compliance with tax regulations and determine the appropriate reporting requirements for rental income received by the officers.
Jun 11, 2018
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starstarstarstarstar 		Corporation 1099 Bookkeeping Question
by: Stephanie

If the officers of the corporation receive rental income from a property management company, they should get a Form 1099-MISC for the rental income they receive showing the amount in box 1 (Rents).

However, they will not receive a 1099 if the rental income is received directly from individuals.

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Transfer of Shares in S Corporation

by Lisa Phillips
(Fairfield, CA)

Transfer of Shares

Transfer of Shares

I have a client, who is an S Corporation. One of the 4 shareholders took out a loan to (1) pay off back payroll taxes and equipment purchases and (2) used funds from the loan to buy out 3 shareholders and also distribute money to himself.

1) Can I treat the loan as a shareholder loan of the existing corporation? Or should the loan be treated as a capital contribution?

2) Then, the checks paid to buy out the other shareholders, do they get posted to their drawing accounts or capital accounts?

3) What if the amount of payments to each shareholder is more than their capital account, this would create an unnatural balance for their capital accounts?

Thank you so much for your time and help.

Hello Lisa,

Thank you for your questions.

1) Yes, you can treat the loan as a shareholder loan of the corporation rather than treating it as a capital contribution.

2) The checks paid to buy out the other shareholders can get posted to their drawing accounts or shareholder distribution accounts up to the amount of equity they have in the business.

3) I believe the amount of payments to each shareholder being more than their capital account is fine. The amount would just end up being a taxable gain on the sale of their portion of the business. This income would pass through to their tax return on their individual K-1's.

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Jul 17, 2023
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starstarstarstarstar 		Corporate Loan Treatment
by: BB

The treatment of the loan would depend on the specific circumstances and agreements in place. If the loan is intended to be repaid by the shareholder personally, it would typically be treated as a shareholder loan.

However, if there is an agreement for the loan to be considered a capital contribution to the corporation, it could be treated as such.

The checks paid to buy out the other shareholders would generally be posted to their capital accounts.

This reflects the transfer of ownership and the corresponding increase in the capital accounts of the remaining shareholder(s).

However, it is advisable to consult with a tax professional or accountant to ensure proper recording of these transactions based on the specific circumstances and legal agreements in place.

If the amount of payments to each shareholder exceeds their respective capital account balances, it may result in a negative capital account balance or an unnatural balance.

In such cases, it is important to review the corporation's legal and financial agreements.

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