1099-Misc & Schedules for Property Managers

[Abhijit Dey]

I am getting some conflicting advise regarding this, so wanted to ask Tax Pros & fellow Property Managers for some advice & real life examples. Say we have a client for whom we have in the year 2016:

1. Collected 12,000 in rents
2. Charged 1,000 in fees
3. Paid 1,200 to vendors for repairs (800 to vendor VA and 400 to vendor VB)
4. So paid out 9,800 to client

I need to give a 1099-Misc to VA for $800; that much everyone agrees on

Q1) What would be the 1099-Misc amount to client?

Q2) Since this is our principal business, and we are an incorporated business, do I report 12,000 in income & 11,000 in expenses? And not on schedule E, right? That's for the client to do (Schedule E)?

The best advice I saw is from Stephen Fishman. He looks like quite published and has avery relevant background to speak on such a topic: http://www.inman.com/2012/02/10/tax-reporting-tips...

But there are detractors as well in the comment section, with someone (Steve Moskaluk) also very logically defending Stephen Fishman.

What Stephen seems to say is: Issue $800 of 1099 to VA, issue $9.800 of 1099 to client, declare a business income of 1,000, and call it a day

On the other hand, Buildium, PropertyWare and quite a few others like them, when you prepare your 1099 automatically at their site, prepares client 1099 for $12,000

So what are we supposed to do? And what are we doing? Thanks!

[Abhijit Dey]

Thank you @Dawn Brenengen. My clients are not going to be happy as this runs counter to usual thinking that they get a net amount. But I am starting to see why IRS might want it this way. If we have have paid for plumbers to fix a toilet and someone to switch out the HVAC, if I give clients a net amount they will be inclined to treat both expenses as the same, but they are not. The first one gets expensed and the second one gets depreciated, and the gross amount lets IRS track it.

I just didn't prepare for it that way, and I am in the middle of doing just that. Thanks again!