Airbnb sends 1099 to property manager

[Aquitaine]

When Airbnb issues a 1099 to property managers, how does the Airbnb Property Manager record the money collected for their customer, the Property Owner? It's NOT income for the property manager. It's just a bunch of deposits. The property manager shouldn't receive the 1099. How does the property manager fix that on their tax return? Not showing the money is cause for an audit by the IRS, showing it is totally incorrect and cause for increased liability, implying a business with ridiculously more income than it really has. 

[M-MTax]

So the property manager shows the income and then the funds forwarded to the owners are subtracted as expenses. The result is the manager retains the fee or commission.

[Aquitaine]

But it is NOT income for the property manager. That's my entire issue with it. 

[Carl]

Yes, it is income for the property manager. Every penny of it. Then what the property manager pays to the property owner is a deductible expense for the property manager. The property manager would need to issue the property owner a 1099-MISC with the amount the property owner was paid reported in box 1 of that form.

[Critter-3]

Since the money was sent from the AirBNB  to the property manager and not the property owner directly  then the manager MUST include it in their income and expense the pass thru to the owners  as well as issuing them a 1099-misc for the rent.  

[Aquitaine]

Issuing a 1099 to the property owner is obvious and clear = it's the property owner's income. However, I am going to continue to challenge that it is the property manager's income, too. Are credit card companies recording ALL the money they process as their income? The management fees and the commission are the property manager's income. The money that is collected and disbursed is nothing but a short term deposit and every way I look at it, it is a balance sheet item. I don't see how it can possibly belong on the income statement. The money sent to the property owner is neither cost of sales nor an expense. 

[tagteam]

---

@Aquitaine wrote:

The management fees and the commission are the property manager's income. The money that is collected and disbursed is nothing but a short term deposit.......

---

I am not certain of the exact nature of the issue in this scenario. 

Either the figure on the 1099 is reported by the property manager as income and the disbursement to owners deducted as an expense or there will be a mismatch between the figure reported by the property manager and the 1099 received by the IRS. The first method eliminates the need to compose an explanatory letter when questioned by the IRS.

[Critter-3]

Well a  property manager who has the AirBNB listed in their name as the responsible party  and gets the 1099 in their company name must report the income on their return and simply expense the portion going to the property owners ... this it just the way it is and it doesn't really matter as  in the end the profit is on the bottom line. 

Now if you don't like it then get it changed with the AirBNB so that they 1099 the owners directly.  

And a CC processing company  charges a fee for the service they provide in moving money from one place to another using trust accounts for banking functions ... it is not the same as your situation.  

[Aquitaine]

Airbnb allows listing a property as the 'property manager' - so it's not really listed "in the property manager's name", but rather FOR the owner. I asked this same question on Quora and received a response that makes more sense (link below), however, it doesn't solve the problem of actually receiving a 1099 and how to properly handle it. Recording the income does not appear to be correct and would show a business with significantly more income than it really has, which I am not sure is even legal and is likely to result in additional liability incl. much larger cost for insurance. Recording 10x the gross income one really has just doesn't seem right on any level. It's also going to look weird to the IRS to have such high revenues with proportionally extremely low net income. 

https://www.quora.com/How-do-I-file-taxes-as-a-Airbnb-property-manager/answer/Mike-Emeigh?comment_id...

[tagteam · Accepted solution]

---

@Aquitaine wrote:

Airbnb allows listing a property as the 'property manager' - so it's not really listed "in the property manager's name", but rather FOR the owner....

---

Yes, it appears as if might want to raise this issue with AirBnB since you are a property manager. If that is unsuccessful (which I would suspect it will be), then you are left with a decision as to whether or not to report the proceeds from the 1099 as income (and deduct the outflow as an expense) or simply explain the mismatch if you are contacted by the IRS.

[Critter-3]

---

@Aquitaine wrote:

Airbnb allows listing a property as the 'property manager' - so it's not really listed "in the property manager's name", but rather FOR the owner. I asked this same question on Quora and received a response that makes more sense (link below), however, it doesn't solve the problem of actually receiving a 1099 and how to properly handle it. Recording the income does not appear to be correct and would show a business with significantly more income than it really has, which I am not sure is even legal and is likely to result in additional liability incl. much larger cost for insurance. Recording 10x the gross income one really has just doesn't seem right on any level. It's also going to look weird to the IRS to have such high revenues with proportionally extremely low net income. 

https://www.quora.com/How-do-I-file-taxes-as-a-Airbnb-property-manager/answer/Mike-Emeigh?comment_id...

---

Why would it look weird ??    This is perfectly normal for your type of business as long as you keep good records and issue the proper 1099-misc forms to the owners to show the movement of the cash flow. 

[janna7]

I am an owner of an AIR BNB property but not the Property Manager.   AIR BNB is requesting my 1099 information but should that be the tax id for the Property Manager since they are collecting income and will send a 1099 to me? 

[Carl]

"should that be the tax id for the Property Manager since they are collecting income and will send a 1099 to me"

Most likely, yes. AirBNB needs the tax ID of the person or business that they pay the rental income to. So if rental income is deposited in/paid to an account with your name on it, that would be your tax ID they need. My response is based on rough information, as I don't know the detailed set up or arrangement between you, your property manager and AirBNB.

[janna7]

Thank you Carl...  that makes perfect sense so now it appears that we need to have the Property Manager submit the W9 info!  

[Carl]

I would not be so sure. My confusion here is, if AirBNB is paying the property manager the income, then why did they not ask the property manager for a W-9 instead of you? You need to clarify this and not make an assumption that my response is the absolute correct one. Since I most likely don't have the whole picture like you do, in my eyes something doesn't add up here.