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hamsterfriend
Returning Member

Received 1099-g for taxable grant that I returned

In december 2020 our Single Member LLC S-Corporation received a taxable grant from the state for an economic recovery grant we applied for.  Immediately after receiving the grant we found out that we did not meet the criteria for it.  We then called the state and let them know the situation and then followed the state's instructions on returning the grant money.  We do have the cashed checks and paper trail to show the grant funds were properly returned  in full.

 

In July 2021 we received from 1099-g showing the full amount of the taxable grant reported to IRS on 1099-G line 6 (taxable grants).  There is no mention on the 1099-g that the funds were returned.  

 

We have already filed our 1120S for the year and we did not report the grant since the finds were returned. 

 

I am guessing  that now that an 1099G was generated I need to report this income but also report the refund.  I assume that I need to file an amended 1120s reporting the grant as Other taxable income and then reporting the return of the money as Other Expense.    Can anyone confirm if this is the appropriate procedure or if there is something else I should do?

 

Is this going to cause more problems then it will solve, is there a better way?

 

1 Best answer

Accepted Solutions
Critter-3
Level 15

Received 1099-g for taxable grant that I returned

You are exactly correct in how to manage this situation.  

View solution in original post

4 Replies
Critter-3
Level 15

Received 1099-g for taxable grant that I returned

You are exactly correct in how to manage this situation.  

hamsterfriend
Returning Member

Received 1099-g for taxable grant that I returned

You are exactly the kind of person I like!   Thank you friend, I appreciate the confirmation.   I've been on hold with IRS for hours with no luck.  Your help means a great deal to me, thank you.

hamsterfriend
Returning Member

Received 1099-g for taxable grant that I returned

Just one more question, as far as my personal tax return I am assuming that there is no amendment needed since the K1 did not change at all as far as I can see.   Did I miss something?

Critter-3
Level 15

Received 1099-g for taxable grant that I returned

Since the K-1 will not change there is nothing to fix  on the personal return.  

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