Reclassifying single member LLC to partnership LLC with amended W-9

[XiongFan]

I am planning to file Form 8832 to re-classify my LLC as a default single member to a partnership. I plan to make the the effective date 01/01/2023 in order to not have to file a separate short year return.

However, I have already provided in the past a W-9 to a company with "Individual/sole proprietor or single-member LLC" checked in box 3 and my personal SSN for Part 1. I plan to update the W-9 with the company with "Limited liability company" checked and "P=Partnership" and provide the TIN of the LLC (which I already have).

The problem is that the company has already made two payments to us and I expect that at the end of the year they will a 1099-MISC for the first two months and another 1099-MISC for after the change.

My question is:

1. Is it possible to re-classify the 1099 income for first two month to the partner LLC?

2. If not, do we have to file a short year return anyways for 2023? In that case, would it be better to make the effective date now rather than 01/01/2023?

[MaryK4 · Accepted solution]

The company can retroactively apply the first two payments to the new FEIN quite easily because they have not filed the 2023 forms yet.  

If they can't/won't you do not have to do the short year return, you can add the income to the LLC 1065.  Unfortunately, there is no foolproof way to proactively explain to the IRS what you did, so there is a possibility you would get a underreporter notice for not reporting the 1099-MISC income on your personal return- it which case you would just have to provide an explanation.  (To avoid this you may be able to include the 1099-MISC on your 2023 tax return under Miscellaneous income with the 1099-MISC as the description then a second entry with the amount in the negative with explanation LLC income.)