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Tax Law (Questions About Taxes)/Corporation and 1099-misc

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Question
I formed a corporation in 2011 and reported a loss.
For 2012 tax year, I had a profit of $13k for my corporation. All my expenses for the corporation are being reported on the corporation forms.
I issued myself a 1099-misc in the amount of $32,000 because I was the only employee of the business.
Do I write off expenses on a SCH C for the $32,000 or do I need a K1?

Answer
Diego,

Thanks for your question.

Writing yourself a 1099 from your corporation is inappropriate and is likely to get the attention of the IRS.

You need to pay yourself a "reasonable salary" complete with payroll deductions.  This is an IRS requirement.

If you have elected S Corp status, you would also issue yourself a K-1 for the profit (not distributions) earned by the business.  If you are not an S corp the Business must pay taxes on the profits and any distributions to you would be taxable to you as dividends.

Hope this helps.

John Stancil, CPA  

Tax Law (Questions About Taxes)

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John Stancil, CPA

Expertise

I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I am Professor Emeritus at Florida Southern College. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a CPA practice, specializing in tax, for over 35 years. I am a member of the National Association of Tax Professionals, The Florida Insititute of CPA's, The NCPE Fellowship. In addition I am a Certified Mentor for SCORE. Visit my website at www.mybaldcpa.com. I also offer seminars and consultations to churches and clergy on their tax issues at www.churchtaxsolutions.com Also visit my blog, www.thetaxdocspot.com. I am listed on Tax Connections at https://www.taxconnections.com/profile/John-Stancil/12258973 Prepare and file your own taxes at www.1040stancilcpa.com

Experience

I hold a doctorate in Accounting, and am a CPA. My certifications of CIA, CFM, and CMA are inactive. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 37 years and have taught accounting and tax at the college level for over 35 years.

Organizations
FICPA, NATP, NCPE Fellowship, Lakeland Business Leaders

Publications
The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly, Mustang Journal of Finance and Accounting.

Education/Credentials
DBA University of Memphis MBA University of Georgia BS in Accounting Mars Hill University

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