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1099-S given to a contractor

Level 7

Contractor bought a rundown property, fixed it up, and sold it. I would like to include it in his Sch C. Would I then first "wash" the 1099-S slip through Sch D?

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Level 15

I know that if an individual gets a 1099-S and if it is not shown on Sch D or 4797 the taxpayer will get a notice saying you didn't report this.

At least I'm pretty sure I know this from back in the days when I believed my clients when they told me they didn't get a 1099-S when they sold their house. They got those notices. I'm older and wiser now. 


ex-AllStar

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6 Replies 6
Level 15

That would avoid a matching notice.


ex-AllStar
Level 11

There are those who believe that a return showing a milion dollars of positive cash receipts is more likely to be selected for audit than one showing half that much.  I'm glad you know what IRS does, because I don't.  All I know is what employees are told to do by the Internal Revenue Manual:

Real Estate Transactions Miscellaneous
  1. If there is a Schedule C or C-EZ (TY 2018 and prior) attached to the return and the principal business is listed as real estate broker, real estate sales, building, construction, or remodeling; or the principal business activity code indicates related business, for example, 233200, 238160, 238900, 531210, etc., consider REAL amount(s) fully reported when:

    1. Gross Receipts on Schedule C or C-EZ (TY 2018 and prior) are larger than the REAL amount(s),

    2. The TP reports the exact amount of the IR(s) on Schedule C, line 6, C-EZ, line 1 (TY 2018 and prior), or

    3. The TP includes the REAL on an attachment.

Level 15

What's REAL?


ex-AllStar
Level 11

4.19.3.8.25 (12-26-2007)
Real Estate Transactions - General
...
Real estate transactions are identified on the Case Analysis screen by the literal "1099S" in the DOC TYPE field and the literal "REAL" in the INCOME TYPE field.

Level 15

I know that if an individual gets a 1099-S and if it is not shown on Sch D or 4797 the taxpayer will get a notice saying you didn't report this.

At least I'm pretty sure I know this from back in the days when I believed my clients when they told me they didn't get a 1099-S when they sold their house. They got those notices. I'm older and wiser now. 


ex-AllStar

View solution in original post

Level 15

"I'm older and wiser now."

I'm impressed since I went the route of being older and dummer now?😉

ex-AllStar, ex-Lutefisk taste taster, ex-ACME product tester
and ex marks the spot where those rocks and anvils hit me.