I am in the process of starting a small farm business for which I have set up an LLC with EIN.
In 2023, the LLC received a USDA NRCS Taxable Grant (1099-G, Box 6) for a high tunnel.
Do I report this 1099-G on Schedule F even though my business was not yet open in 2023?
To me, neither Schedule F nor the subsequent Self Employment Tax seem applicable for 2023 because I was not engaging in ongoing business activities.
And, the SE Tax is being calculated on 100% of the Taxable Grant because there are no deductions for depreciation or start-up and organizational expenses. (It’s my understanding that these deductions start in the tax year in which the business officially opens.)
A second option for entering the 1099-G is from another Turbo Tax forum: https://ttlc.intuit.com/community/business-taxes/discussion/re-how-do-i-properly-enter-info-for-a-tax[product key removed]ted-to-my-farm-business-llc-own-ein/01/2641219/highlight/true#M87310.
In doing this, the 1099-G gets reported on Schedule 1 which makes it look like I personally received the taxable grant rather than the LLC. Is that a problem with the IRS? How would they reconcile a 1099 issued to the LLC EIN being reported on Schedule 1 which is tied to my personal name and SSN?
Thank you in advance to anyone who can help me sort this out.
If this is a single-member LLC, disregarded entity for tax purposes, then you should report it on your personal return Schedule F and not as "other reportable income".
If this is another type of LLC, such as one taxed as a partnership, then it should be reported on a tax return for the entity.
The IRS information return matching program will look for the amount to appear on a tax return. If you receive a notice from the IRS that it is missing, provide evidence of where the amount was reported.
Yes, this thread contains useful additional examples and discussion of this topic.