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Returning Member
posted Mar 11, 2024 8:19:52 AM

1099-int for a Corporation

I started a business 2 years ago. The business type is "Corporation". It is a S-Corporation which will pass through all the net income to my personal tax filing. 

My corporation has money market funds earning interest in a brokerage firm. 

For the interest my corporation earned, I expect to receive a Form 1099-INT for tax reporting purposes.

My broker does not produce a 1099-INT because "a Corporation does not need to receive that and we do not report your interest income to IRS."

I verified IRS's website https://www.irs.gov/instructions/i1099int#idm[phone number removed]736

This is what I got in that IRS web page"

"You are not required to file Form 1099-INT for payments made to certain payees including, but not limited to, a corporation ...."

 

Does my corporation need to pay tax on the interest earned from money market fund? If yes, why IRS says a corporation is not required to file Form 1099-int?

0 2 1082
2 Replies
Expert Alumni
Mar 11, 2024 8:30:34 AM

Yes. Your S-Corp has to report this interest income, which will flow through to its shareholders to be taxed. The interest is reported on line 5 of form 1120S - Other income.

 

The IRS says that the payer (your broker) is not required to file form 1099-INT when interest is paid to a corporation. They didn't say that a corporation doesn't need to report form 1099-INT.

 

Your broker is not required to send forms 1099-INT to corporations because corporations have accounting books which should have recorded all income and expenses.

Level 15
Mar 11, 2024 9:06:34 AM

why no 1099-INT? some corporations do not use a calendar year (even some S-Corps) or use the accrual basis of accounting thus the ability of the IRS to match the interest to what's reported on the return is extremely limited.