This is the time of year when Form 1099s begin showing up. You may get one if you provided services to a business, if you sold something, if you receive interest, dividends or royalties or if you have a forgiven debt.
In this question received at USTaxAid, a Form 1099 was received and it wasn’t exactly right. The question is pretty long, so I’ve edited it to just provide the pertinent facts.
“Land was inherited by 4 heirs. The timber was sold off the property for $120,000. The check went to just one of the heirs who was told that the Form 1099-S would go to just this heir as well. These are the related questions:
#1 Do I need to file 1099S (Fed and report to MS) for the amounts paid to my brother and sisters?
You will need to report the money paid them for their share, but you can just do that as part of your tax return. You don’t need to file the Form 1099-S as well.
#2 Since there was no “farming” activity (by any of us) would I just file a Schedule E showing timber revenue but with no appreciation since inheritance?
I suggest you file the Schedule E and then show payments to your fellow heirs in a statement. For example, $120,000 gross income, $30,000 reported by Joe Smith, SSN 123-45-6789 as beneficiary……”
If you are going to have an ongoing farming operation shared by the family, I recommend you form a multi-member LLC to hold the property.