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My client that owns an S Corporation, received a 1099 from a brokerage house. Apparently, they invested some of their cash in dividend paying stocks and thus have interest and dividend income. How should this be reported? On the 1120S Form or the individual Form 1040.


The BIDaWIZ Team's Answer:

The S Corporation would report the amounts on the 1099 as income on the Form 1120S. Please make sure that the amount reported on the K-1 appears on line 4 for interest income and line 5 for the dividends. Please note that you should have a balance sheet line item for the investment that is impacted by any non-taxable distributions.
References: IRS Publication 550 & IRC Section 1361

The BIDaWIZ Team



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