1099 - losses taken against RE

Jan 24, 2007 2 Replies
L

This question is coming from a non-accounting person so please excuse my ignorance. Someone in my office is preparing 1099s for 2006. An example of one situation: According to the the yearly spreadsheet, there was a total income of 12K. He is adding back in the losses of the months where the losses were taken against the RE. Is this correct? If not I am ready to suggest asking his accountant for clarification. If it is correct, it's just one more thing for me to learn. Thank you.



LM



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P

Because that person, during 2006, paid unincorporated entities more than $600 each. Preparing 1099s is an indication you had expenses, not income.

Unfortunately, I have absolutely no idea what you're even trying to ask. He has gross income (revenues) of $12,000? Or he had profits (income less expenses) of $12,000? By RE, do you mean Retained Earnings? And you're asking whether profit in one month can be offset by losses in another month, where both the months fall within the same tax year? That's essentially correct, although it's not how I'd describe the mechanics of it. Basically, you use all of your income and all of your deductible expenses for the entire year in determining whether (and to what extent) you have profits or losses for the year. Phoebe :)

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M

Either someone is very confused or they are not preparing

1099's. 1099's have nothing to do with retained Earnings. Seek out competent assistance STP (Sooner than possible)

Regards,

Mark Rigotti, CPA

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