Sub S corp with 1099 in Presidents name

Experience like this? Heavens NO.

IRS would see thru this subterfuge in a Noo Yawk minute. I would like to bet that the previous accountant was not a CPA.

ChEAr$, Harlan Lunsford, EA n LA

Start by telling your prospective client how fortunate he is to have come to you before the IRS decided to audit him.

The trading problem is commom for brokers. I have no idea as to the proper way to have structured the business. BUT I am certain that he has to be peronally on the hook to the exchange and other brokers for losses. You need to research how other brokers handle this.

As it sits right now, the Schedule C income that does not pay the expenses of the S-Corp is his ordinary income. That includes the S-Corp dividend

Another problem is that the owner of an S-Corp is NOT an employee of the S-Corp for payroll purposes and that needs to be corrected too.

Dick

wrote

Exactly like that? No.

But I have seen 1099's issued to one or more owners long after they for the corporation, mostly for reasons of laziness on the part of the owners and/or the issuer of the 1099. I see it often in the medical and insurance fields. Some insurance companies are hell bent on making payment directly to the service provider - in that doctor's name - instead of the medical practice name if incorporated. similarly for insurance agents getting commissions - even though the policy was sold be the agent corporation.

It's most likely proper to show the receipt on Schedule C, then issue a 1099 to the "S" corp, partnership, etc if that is indeed where the money went.

Someone needs to look into the legal aspects of what he is doing, if as you say "he can't be a corporation and do trades as a corporation", there may be some legal aspect that needs to be addressed.

Sorry, I don't see the subterfuge/problem even in a California hour. Can you explain?

I have done it the same way. Enter the revenue on Schedule C, then enter it as an expense paid to the S Corp. He could even issue a 1099 to the S Corp, but I don't think they have changed the rules to make that necessary.

Since nobody else has, I'll try.

The general issue is that personal income can't just be handed over to a corporation (even, or especially, Sub S) in order to make corporate expenses deductible (that wouldn't be if the corporation didn't have income).

On the other hand, various securities regulations require that certain activities be undertaken only by natural persons (humans) and not legal persons (partnerships, corporations, etc.)

Seth