Issuing 1099 to Contractors on rehab
I flipped 2 properties last year and so far have flipped 2 properties this year in my own individual name. I filed federal income taxes as short term capital gain on Schedule D. I did not issue any 1099's for the contractors that did work on the properties. Is issuing 1099s for workers necessary when only doing a couple rehabs in your own name?
Also, if I start doing more properties then I will probably form an LLC and would like to know what is the penalty for not filing 1099s in that situation as an LLC?
Thanks all in advance.
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#1 Foreclosures Contributor
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- West Palm Beach, FL
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#1 Foreclosures Contributor
- Real Estate Professional
- West Palm Beach, FL
Get a CPA now. Income from flips is Not short term cap gains. It is ordinary income, plus both sides of social security/med. You're going to have some serious penalties and interest if audited. Yes you need to issue 1099's. It's the only way you can deduct these expenses if audited.