Investors & landlords

It does not matter if it is a Single Member LLC.  That does not change anything.

 

 

In answer to the original question:

 

(1)  If the rental activity rises to the level of a "Trade or Business", yes, a 1099-MISC is required if you pay an unincorporated business $600 or more for services.

(2)  If the rental activity does NOT rise to the level of a "Trade or Business", NO, an 1099-MISC is NOT required.  But you can choose to file it if you want.

 

Unfortunately, the phrase "Trade or Business" is not clearly defined.  In some cases, courts have ruled that even a single rental property could rise to that level.  In other cases, several rentals are not considered a Trade or Business.  It depends on the exact facts-and-circumstances of your situation, and you may need to some extensive research to see where your rental activity falls.

 

 

Some recent Regulations on the Qualified Business Income (QBI) deduction may show a little insight to how the IRS views whether a rental activity rises to the level of a "Trade or Business".  In part, that Regulation says that if at least 250 hours of work are put into the rentals (including anybody you hire to do work, such a contractors), then for purposes of the QBI deduction, it is considered a "Safe Harbor" as a "Trade or Business".

 

Just keep in mind that the 250 hour is ONLY a "Safe Harbor" and is ONLY for purposes of the QBI deduction (NOT for the requirement of sending 1099-MISCs).  But that MIGHT give you a GENERAL idea for what the IRS would be looking at for determining if it is a "Trade or Business" or not.

 

 

If you think your situation is a "gray area", you might choose to be on the 'safe side' and file one.

 

 

P.S:  That Nolo article has numerous errors, as do many other Nolo articles.