"LTSLLC" <lizcanotaxservicesllc[at]spymac.com> wrote:

- quote -

Thanks. My own accountant was out of the office when I
posted the question. He confirmed last week that I should
issue a 2005 Form 1099. He also added the fact that all
attorneys use Cash Basis accounting so there is no conflict
between the 2005 Form 1099 I will send for my company and
the year in which he reports income.

I used an e-file service for the Form 1099, so I was able to
file before the Federal deadline for Form 1099, which is
March 31 if you e-file. Unfortunately, I missed the January
31 date to get my attorney his paper copy. I assume his
office properly reported their income in spite of my missing
form.

--
Vic Roberts
Replace xxx with vdr in e-mail address.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Vic,

You would issue the 1099 for tax year 2005 since its
issuance is based on when you made the payment to the
attorney, and not based on when the attorney claims it as
income.

Rudy
www.LizcanoTaxServicesLLC.com

Here are the instructions for payments to attorneys (these
were added because of attorneys' propensity to underreport
the fees paid to them):

Payments to attorneys.
The term attorney includes a law firm or other provider of
legal services. Attorney's fees of $600 or more paid in the
course of your trade or business are reportable in box 7 of
Form 1099-MISC.

Gross proceeds paid to attorneys.
Under section 6045(f), report in box 14 payments to an
attorney made in the course of your trade or business in
connection with legal services, for example, as in a
settlement agreement, unless the attorney's fees are
reportable by you in box 7. Generally, you are not required
to report the claimant's attorney's fees. For example, an
insurance company pays a claimant's attorney $100,000 to
settle a claim. The insurance company reports the payment as
gross proceeds of $100,000 in box 14. The insurance company
does not have a reporting requirement for the claimant's
attorney's fees subsequently paid from these funds.

These rules apply whether or not the legal services are
provided to the payer and whether or not the attorney is
exclusive payee (for example, the attorney's and claimant's
names are on one check). However, these rules do not apply
to wages paid to attorneys that are reportable on Form W-2
or to profits distributed by a partnership to its partners
that are reportable on:

* Schedule K-1 (Form 1065), Partner's Share of Income,
Deductions, Credits, etc., or
* Schedule K-1 (Form 1065-B),Partner's Share of Income (Loss)
From an Electing Large Partnership.

Payments to corporations for legal services.
The exemption from reporting payments made to corporations
does not apply to payments for legal services. Therefore,
you must report attorneys' fees (in box 7) or gross proceeds
(in box 14) as described above to corporations that provide
legal services.

Taxpayer identification numbers (TINs).
To report payments to an attorney on Form 1099-MISC, you
must obtain the attorney's TIN. You may use Form W-9,
Request for Taxpayer Identification Number and
Certification, to obtain the attorney's TIN. An attorney is
required to promptly supply its TIN whether it is a
corporation or other entity, but the attorney is not
required to certify its TIN. If the attorney fails to
provide its TIN, the attorney may be subject to a penalty
under section 6723 and its regulations, and you must backup
withhold on the reportable payments.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Victor Roberts wrote:
- quote -

A moot point probably, since all attorneys charge
considerably more than $600 for anything.

ChEAr$,
Harlan Lunsford, EA n LA

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

"hlunsford[at]bellsouth.net" <hlunsford[at]bellsouth.net> wrote:
- quote -

My understanding is that there is no threshold for filing a
Form 1099 for Gross Proceeds paid to attorneys, as listed in
Box 14 of Form 1099, but the filing threshold for fees paid
to attorneys, as listed in Box 7 is $600.

--
Vic Roberts
Replace xxx with vdr in e-mail address.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Victor Roberts wrote:

- quote -

I have heard of cases like this in the past, (don't quote me
now), wherein the payer went ahead and printed out the A,B
and C copies with 1096, and did everything except mail the A
and 1096 to Austin service center. IOW, he has a file copy
and the attorney got the B copy, albeit late. So then. in
case of audit in the future, IF EVER....! the payer has the
file copy to prove the 1099.

On another note however, isn't does the 600$ threshold apply
in the case of attornies? I thought I heard or saw where
all amounts are subject to 1099 reporting, even less than
600.

ChEAr$,
Harlan Lunsford, EA n LA

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

I own a small C Corporation in New York. In late December
2005 I retained an attorney for work to be started in 2005
and completed in 2006. I sent him a retainer in December
2005 and since I use cash basis accounting, I recorded this
on my books as a payment for 2005.

The payment was greater than $600, but since this was the
first year in which I paid attorney fees greater than $600,
I forgot about Form 1099. Now that I have remembered that I
need to file Form 1099 for this payment I wonder in which
tax year the 1099 should be issued. I made the payment in
2005, but the attorney may use accrual accounting so he
would not show the majority of the expenses until 2006. Do
I issue a Form 1099 for 2005 or 2006?

I know that if this was due for 2005, then my company may be
subject to a penalty of $30, I believe, for filing more than
30 days late, but before August 1.

--
Vic Roberts
Replace xxx with vdr in e-mail address.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >