**THE-RFI-EMI-GUY** wrote:

- quote -

Just report the income as other income and then subtract it
out on the next line with an description.

Mike

<< ================================================== ===== > << 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. > << ================================================== ===== >

- quote -

Yes they do. But it is a little more complicated than that.
Remember, this is a big bureaucracy. The person who inputs
the return information does not read it, they just input the
information. When the return get kicked out of the IRS
computer system because of a 1099 mismatch at that point
someone may read it, or the computer may just issue a
notice. If however, if it is selected for audit AND the IRS
agent receives a copy of your return (they may just get a
transcript instead of the actual return) they will read it.

Bottom line - Still attach the explanation, and if you get
contacted explain to them again about the issue and how you
attached an explanation to the return. Show the 1% of Line
21 (on an attached statement), then show a negative 1%
resulting in zero income with an explanation.

<< ================================================== ===== > << 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. > << ================================================== ===== >

**THE-RFI-EMI-GUY** wrote:

- quote -

They will not read explanations sent with the return.

<< ================================================== ===== > << 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 am late filing this year, having requested an extension
because of a complex tax year, due to a move of residence,
house sale and purchase.

One item I have is a 1099 misc issued by a realtor as a 1%
rebate on a house I bought last year. He showed the amount
in line 3 other income. This was not income as I did not
perform labor or services for this money. It was simply a
return of a portion of his commission as "fix up expenses"
for the house. In actuality this was money directly out of
my pocket returned to me after closing and should be more
accurately shown as a reduction of the cost basis of the
house. I talked to a local tax preparer who told me "the IRS
never reads letters of explanation" and to report this as
income (and pay substantial tax on unrealized income).

It is my understanding that this issuance of a 1099 misc by
a realtor is becoming more prevalent and that receiving a
1099 misc does not in itself constitute proof of income. I
also know that I need to address this 1099 misc in my tax
filing (not ignore it).

What is the effect of attaching a letter of explanation,
not including this amount as "income" and using to report
lower cost basis for the house as purchased. By the way I
have written evidence of the transaction surrounding the 1%
rebate.

--
Joe Leikhim K4SAT
"The RFI-EMI-GUY"=A9

"Treason doth never prosper: what's the reason?
For if it prosper, none dare call it treason."

"Follow The Money" ;-P

<< ================================================== ===== > << 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. > << ================================================== ===== >