We have hired a lawyer in a lawsuit where we all have interests but the lawyer wants one client to handle the money. So everyone has paid me and I'm paying the lawyer on behalf of all of us.
I understand that only my portion is an expense. Lets say the Lawyer is $2000 and some other fellows paid me $1500 where I am to write a check on behalf of my LLC for $2000. I understand that I can only deduct $500.
My question is, since Schedule E line 10 will have $2000, will the IRS be scratching their heads when I only 1099 for the $500, or since my portion is under $600 then I do not need to? Are they expecting me to 1099 for the $2000 claimed?
OR, since this money was deposited into my LLC bank account, do I need to claim this money as "income" and then 1099 the lawyer for the entire $2000 deduction?
I understand the end result is the same - $500 deduction - but what is the most proper way to claim it?
@Opus 17
