I, as an LLC, purchased a business from an LLC and and it holds the loan on the sale. I need to know do I have to report the interest I pay to original LLC to the IRS on a 1099 or do they have to provide a 1099, or other form, showing the amount of interest they received from me?

  • Not sure the answer, but you may find some more people by adding some more tags like “interest”, “LLC”, or “1099l – Corey P May 2 '19 at 3:39

I've not researched this extensively, but my understanding is that you would be required to furnish a 1099-INT to the lending LLC and IRS if you paid at least $600 in interest for the year. The 1099-INT instructions list a host of exceptions, the primary one that could be applicable here is that you don't issue 1099's to corporations, so if the lending LLC has elected to be taxed as a corporation then you wouldn't issue them a 1099-INT.

If the business purchase included real property then the lending LLC could be required to issue a 1098.

It's worth consulting your tax professional on this one, but regardless of whether or not you are required to furnish a 1099-INT, both parties should keep thorough documentation of payments that show interest and principal paid as it offsets the buyers business income and the interest counts as income to the seller/lender's LLC.

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    OP can request a W-9 from the lending LLC. If they check the box "corporation", then OP does not need to send them a 1099-INT. – Rocky May 2 '19 at 17:21

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