Discussion:1120S Schedule B line 10a (1099s)

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Discussion Forum Index --> Tax Questions --> 1120S Schedule B line 10a (1099s)


Hermie2000 (talk|edits) said:

27 January 2012
Has anybody else seen the new line on the 1120S? It asks "Did the corporation make any payments in 2011 that would require it to file Form(s) 1099?

Of course, I ask all clients if they had any contractors paid over $600 and if they need assistance with Form 1099 and 1096, but I'm concerned that this question could be used by the IRS to get really technical. I find it hard to believe that the IRS wants me to sit down with every 1120S client and determine if W-9s have been collected on all vendors and that all vendors that technically require 1099s were issued. I thought this proposed bill was shot down in Congress?

My inclination is to mark the box "NO" (knowing that I have covered contractors) and move on. BUT, I'm concerned that if the client was ever audited the IRS could use this line to come in and disallow any expenses to vendors who weren't 1099'd.

Any thoughts?

JR1 (talk|edits) said:

January 27, 2012
Use it as an opportunity. Ask about payments with the client, and either make sure they do them or pay you to do them. Of course we know what they're doing with the questions.

Craigums (talk|edits) said:

27 January 2012
I just took a good CPE class from a guy that clearly knew his S---.

His advice was, "Don't you dare check "yes" for 10a and check "no" for 10b." and left it at that.

Craig

PirateCPA (talk|edits) said:

27 January 2012
Hermie, the only concern would be that they'd issue the penalties for failure to file 1099s. The IRS doesn't have the authority to disallow an expense based solely on 1099s not being filed.

Even though it's a nuisance, as JR1 said, this is an easy opportunity to offer more services.

Ckenefick (talk|edits) said:

27 January 2012
...more changes to the 1065...same 1099 question, Sch L partner loans, etc. Makes me wonder if the "prior year" balance sheet numbers need to be "restated" in accordance with the new format.

Ckenefick (talk|edits) said:

27 January 2012
My inclination is to mark the box "NO" (knowing that I have covered contractors) and move on. BUT, I'm concerned that if the client was ever audited the IRS could use this line to come in and disallow any expenses to vendors who weren't 1099'd.

That's not a valid concern as noted above. The real concern is the jurat.

Fsteincpa (talk|edits) said:

27 January 2012
It's on the Schedule C as well.

PirateCPA (talk|edits) said:

27 January 2012
Chris, as far as the jurat concern, wouldn't simply taking the client's word for it (and keeping record of that word) be enough, assuming you have no reason to believe otherwise?

Ckenefick (talk|edits) said:

27 January 2012
Yes.

Death&Taxes (talk|edits) said:

27 January 2012
"assuming you have no reason to believe otherwise?" That is the key, the 800 lb gorilla. The client tells you that his IT guy keeps his business running and suggested this and that but he has buried the expense in 'repairs'....'is this guy incorporated?' "Did you pay him $600 or more?" If he hadn't mentioned it, do you ask about certain accounts on his simple QB P&L, or Excel spreadsheet? I am assuming here that you don't do the accounting, but rather he is an end of year wonder.

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