Property Management Company in Business Edition

[RobertB4444]

Unfortunately, because you received a 1099-MISC and sent a 1099-MISC you need to include both the income and the expense on your return.

Even though it zeroes out in the end the IRS matches forms with social security numbers and EINs.  They will look for that $100K in income on your return and wonder why it is not there.  Then, as a separate payment to you, include the $2000 in income that you receive from the client.

[Critter-3]

Hopefully you have separate bank accounts for your business and all the money coming in from rent (a trust account) and that pays out the rental expenses & owners portion.   It should never be co mingled with your finances.   Some property managers even have separate trust accounts for each client but if you have good bookkeeping that is not really necessary. 

[Goro7731]

---

@Critter-3 wrote:

Hopefully you have separate bank accounts for your business and all the money coming in from rent (a trust account) and that pays out the rental expenses & owners portion.   It should never be co mingled with your finances.   Some property managers even have separate trust accounts for each client but if you have good bookkeeping that is not really necessary. 

---

Yes, I have a separate TRUST account to manage client funds.  I was hoping that if the incoming rental income on the 1099-MISC matched the outgoing 1099-MISC I issue to the owner, I wouldn't have to even list the rental income on my taxes; however, this seems to not be the case. 

[Goro7731]

---

@RobertB4444 wrote:

Unfortunately, because you received a 1099-MISC and sent a 1099-MISC you need to include both the income and the expense on your return.

Even though it zeroes out in the end the IRS matches forms with social security numbers and EINs.  They will look for that $100K in income on your return and wonder why it is not there.  Then, as a separate payment to you, include the $2000 in income that you receive from the client.

---

Alright. Makes sense. I assume I declare the rental income ($100,000) on Form 1065 (Income section 1a) as Gross receipts or sales. I also declare my $2,000 management fee there as well, right?

Where/How do I declare the $100,000 in gross rental expenses (1099-MISC issued to owner) on Form 1065?  Is it listed under Income Section 1b (Returns and allowances), or do I list it as a Rent Deduction (Item 13)?

Thank You

[Critter-3]

NOT RENT... that would be for rent you pay for office space  ... use line 20 ... other misc and make a category for it in the program.