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Oldlock15
Returning Member

1099 for family members of life estate

My siblings and I have inherited a life estate from my mother which recently started producing monthly royalty payments from an oil and gas well.  A check is issued in all names but only one SS# was requested and that person (me)  will be the one issued a 1099 from the Gas Company.  All of us have to endorse the checks and then we split the money evenly.  Can I issue 1099's to each of my siblings and only report my share of the proceeds of the royalty payments and let them report their share? 

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5 Replies
ErnieS0
Expert Alumni

1099 for family members of life estate

Yes. Issuing separate Form 1099s to your siblings is the best option. There are “workarounds” but they get messy.

 

You can use TurboTax Quick Employer forms if you are using TurboTax Business or Home and Business for your Desktop Computer, or TurboTax Online Self Employed or TurboTax Live.

 

Otherwise you can prepare 1099s by hand or through online services.

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Oldlock15
Returning Member

1099 for family members of life estate

Where and how do I report the 1099-misc the gas company sent me? Do I report the full amount on Schedule E?  The check was issued for 5 people and all 5 of us had to endorse it. My SS# is the one that received the 1099-misc. I will send all 4 of them a 1099-misc for their share. Do I report this amount on a Schedule E and show the total amount at the top and then show all 4 1099-misc? 139,000 is split 5 ways but how do I show only my share on my return. I know I have to send the 1099 information to the IRS along with the 1096 form but I'm not sure if I show the division of amounts on Schedule E or do it on a Schedule B and show it as a nominee distribution.

JamesG1
Employee Tax Expert

1099 for family members of life estate

Report the full amount on a separate line as income to the Schedule E.

 

Then report the amount remitted on to the others as a separate expense line on the Schedule E.

 

So, if the amount of the 1099 were $100, report the full $100 on one line of income.

 

Then report the $80 as a separate expense on Schedule E.

 

You acknowledge the full amount of the 1099 but also pass along the income that rightfully belongs to the others.

 

Keep copies of your calculations and correspondence should the IRS ask questions at some point down the road.

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Oldlock15
Returning Member

1099 for family members of life estate

I have reported the total amount of a Schedule E and each dispursement I reported as an expense with a description of what I did.  Now I need to submit to State of PA, (I think) as well. PA and WV require one sent to state, but WV if only money was withheld. Is that correct? 4 1099-MISC issued, 2 to OH residents, 1 to PA resident, 1 to WV resident. I think I don't need to submit to WV if there was nothing withheld. What is the opinion of experts on  State reporting of 1099-MISC? (WV and PA don't participate in the Combined Federal/State Filing) 

RobertB4444
Employee Tax Expert

1099 for family members of life estate

If no income was with held you don't need to submit them to West Virginia.

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