Family Farm LLC collecting rent, IRS forms

[frankharry]

The four members of my family formed an LLC for our family farm on 1/1/2019.  Our one tenant paid rent directly to the members in January and March of 2019, and issued us each individual 1099-MISC forms in January 2020, like before the LLC was formed.  The tenant is an LTD company.  Each member of our LLC has paid his/her own share of the expenses through the LLC bank account.  Future rent payments will go into the LLC bank account.  We need to file form 1065 for the LLC for 2019 showing the received rent and expenses. 

Will this be a problem if the tenant hasn't filed a 1099-MISC form naming the LLC as the recipient of the rent payments?  Should we request the tenant refile the forms showing the LLC instead of individual members as recipients?

Thanks for any advice.

[KarenM90 · Accepted solution]

If the funds were paid to each of you individually and went into your own personal bank accounts, the tenant may not be willing to re-issue the 1099's, as they would not reflect what actually happened.

I recommend that each of you recognize the Rental Income on your own personal returns for 2019 with an offsetting expense that says "Nominee Distribution to XX-XXXXXXX" (insert the federal ID # of the LLC. 

When you file the LLC tax return, include the income as if it was paid directly to the LLC.

This will enable IRS to match up the 1099's with each of your tax return, and allow you to claim the rental income on the LLC tax return.