1099K Received LLC was updated from Single Member to Multimember LLC

[vshah20]

My Wife's LLC was a single member LLC from Jan 2022 to May 2022. She added me as a member in June 2022. So from June 2022 to Dec. 2022, its a multi-member LLC. We will be filing Schedule C for Income from Jan to May 2022 and 1065 for Income from June to December 2022. 

Question: We received a 1099K from Spot On. It shows income for the entire year. What is the accurate way of splitting it between Schedule C and 1065 without raising flags on IRS end.

Thank you in advance for all your help.

[AliciaP1 · Accepted solution]

You can use your bookkeeping records to determine the split as it truly happened.  For instance, if your 1099-K reports $10,000 and your records show $4,000 was earned Jan - May you will report the $4,000 on your Schedule C and the other $6,000 for the partnership.  You do not need to enter your 1099-K specifically on either return.

To enter the $4,000 (from my example) income to your Schedule C in TurboTax Online you can follow these steps:

1. Open or continue your return in TurboTax
2. Search for self employed income (use this exact phrase, don't add a hyphen) and select the Jump to link at the top of the search results
3. Answer Yes on the Did you have any self-employment income or expenses? screen
   • If you land on the Your 2022 self-employed work summary page, select Review next to the work you're adding income for
4. Answer the questions on the following screens until you arrive at Let's enter the income for your work
5. Scroll down to the Income section and click Add income for this work
6. Choose Other self-employed income and Continue
7. Here you can list your single-member LLC earned portion of the 1099-K income

[vshah20]

Thank you so much for @AliciaP1 . You are a lifesaver.

Is the income for single member LLC considered my wife's income? For some reason Tubrotax is not giving an option to assign to single member LLC. It does have its own EIN number and the 1099 has EIN number not SSN.

TurboTax Business does not have an option similar to TurboTax Home and Business where I can enter the 1099 information like the Filer's TIN, address etc. Its just simply asking to enter all the 1099 income in one space and thats it. Is this normal?

[ThomasM125]

The income for the single-member LLC woud be your spouse's income in this instance, since she owned the company by herself initially.

You enter the single member LLC income as business income in the personal TurboTax product. It is reportable on a schedule C, which is attached to your personal form 1040. You designate who it is for when you set up the business in TurboTax. The schedule is identfied by both the taxpayer's social security number and the business federal ID number, if you have one.

It is not necessary to enter a form 1099-NEC to report business income on a corporate or partnership return. This may be so since the 1099 forms are intended more for individuals who report income on a schedule C.

[vshah20]

Got it. Thank you so much @ThomasM125