How to tax a co-investor?

[John T.]

Hey all,

I have an interesting situation that I will need to deal with next year. My father is a year from retirement and has decided to withdraw his 401k to help me buy some additional investment properties. The deal is we will split the investment and profit, however I'll be responsible for all the paper work. Pretty good deal for him, right?! Anyway when I file taxes next year I realize I'll be claiming 100% of the income on my taxex, but I had planned on adding his portion of the profit as a loss on my schedule E, perhaps as a management expense. In doing this, what is the correct way to go about it? I don't have a business account or federal tax ID for the business since it has just been me thus far.

Can I just 1099 him at the end of the year for what I have paid him? Isn't there some law where if he doesn't pay tax on the 1099 it would become my liability? Please advise!

Thanks,

John