2

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
2

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.

|improve this answer|||||
  • 1
    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

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.