Yes, she can issue the 1099-MISC for the amounts she transferred to the subtenant. The key is that your daughter should have clear records showing the money was paid to the subtenant and why. It could be a good idea for your daughter to put something in writing for the subtenant to sign in regards to the buy out and why she is paying her. She has the upper hand in providing her the money from the buy out now. It would just be further evidence that she made the payments to the subtenant.
Nominee Returns. This is how the IRS knows what you are doing.
Generally, if you receive a Form 1099 for amounts that actually belong to another person or entity, you are considered a nominee recipient. You must file a Form 1099 with the IRS (the same type of Form 1099 you received). You must also furnish a Form 1099 to each of the other owners.
File the new Form 1099 with Form 1096 (this is a transmittal for the 1099) by mailing to the Internal Revenue Service Center for your area. (Provided on the Form 1096)
- On each new Form 1099, list yourself as the payer and the other owner, as the recipient. On Form 1096, list yourself as the nominee filer, not the original payer. The nominee is responsible for filing the subsequent Forms 1099 to show the amount allocable to each owner.
The forms filed with the IRS should be the red copy so if you don't have a color printer, go to the IRS website and order the forms here:
@john_sramek
[Edited: 03/12/2025 | 9:04 PM PST]
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