Rental Property owned in LLC

[ejunker]

My wife is the sole owner of  the LLC which owns one rental property. That property is rented to the company in which my wife has both an ownership interest and an administrative role and the company issues he a 1099NEC for the rental. How is this reported in the 1040? In the past, we have used Schedule E, reporting income and expenses of the LLC.

[Critter-3 · Accepted solution]

The company should have filed a 1099-MISC for the rent paid  NOT a 1099-NEC so that error should be corrected but for now you can  keep entering the rent on the Sch E.   SKIP the 1099 entry section and simply enter the rent on the Sch E.  

[Carl]

My wife is the sole owner of the LLC which owns one rental property.

Typically, a single member LLC reports all business income/expenses on SCH C. However, rental property is passive income. So the rental income/expenses gets reported on SCH E. Absolutely nothing concerning the rental gets reported on SCH C. So if rental property is the only thing the LLC owns and the only source of income for that LLC, you won't file a SCH C at all.

the company issues he a 1099NEC for the rental.

That's most likely wrong. Rental income is reported by the entity paying the rent, to the entity the rent is paid to, on form 1099-MISC with the gross amount of rent paid reported in box 1 of that form.

The 1099-NEC is for earned income. Rental income is passive income, so it's not reported on the 1099-NEC. It's reported on the 1099-MISC in box 1.  But overall, based on the information provided at this point, I see no reason or legal requirement for the rental income to be reported on a 1099 at all.

Now there are situations where rental income would be reported on SCH C. For example, say you have your own single member LLC business and that business owns the storefront it sells merchandise out of. Then your business rents out a part of your building to another business. That rental income could then be reported on SCH C along with all your other business income.

[M-MTax]

For example, say you have your own single member LLC business and that business owns the storefront it sells merchandise out of. Then your business rents out a part of your building to another business. That rental income could then be reported on SCH C along with all your other business income.

No.....that rental income would still be reported on SCH E.