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Nontaxable 1099-K for security deposits. Where to report it on 1065?

My partnership LLC received a 1099-K for non-taxable security deposits for my tenants. I have to report receiving it, but TT business does not allow me to enter a 1099-k or the senders info. 

Does it get entered under Royalties (Line7) on my 1065 then deducted under line 11 type "I" to offset the amount?

 

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Nontaxable 1099-K for security deposits. Where to report it on 1065?

Thanks for that insight. Won’t the IRS look at the 1099-k sent to them by RentRedi and look for it on my return? The 1099-k does not specify it was for deposits.
I am not required to show my ledger. 

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PatriciaV
Employee Tax Expert

Nontaxable 1099-K for security deposits. Where to report it on 1065?

Form 1099-K is an IRS tracking tool for third-party payment processors. It's not unusual for non-income activity to be reported on a 1099-K, by the very nature of the reporting entities (credit cards, PayPal, etc.). Keep good records so you can document the purpose for these payments in the unlikely event the IRS requests more information. As long as you report all your actual income, you have satisfied the IRS requirements.

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View solution in original post

3 Replies
AliciaP1
Expert Alumni

Nontaxable 1099-K for security deposits. Where to report it on 1065?

No, you do not have to report the specific K-1 information on your partnership return.  Since the security deposits are not income to the partnership (unless they are forfeited), you should not report income of any kind.  They should be listed as a liability on your balance sheet on your books, and if you are required to report your balance sheet (TurboTax will ask questions to determine that as you enter the information) you will show the deposits there. 

**Say "Thanks" by clicking the thumb icon in a post
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Nontaxable 1099-K for security deposits. Where to report it on 1065?

Thanks for that insight. Won’t the IRS look at the 1099-k sent to them by RentRedi and look for it on my return? The 1099-k does not specify it was for deposits.
I am not required to show my ledger. 

PatriciaV
Employee Tax Expert

Nontaxable 1099-K for security deposits. Where to report it on 1065?

Form 1099-K is an IRS tracking tool for third-party payment processors. It's not unusual for non-income activity to be reported on a 1099-K, by the very nature of the reporting entities (credit cards, PayPal, etc.). Keep good records so you can document the purpose for these payments in the unlikely event the IRS requests more information. As long as you report all your actual income, you have satisfied the IRS requirements.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
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