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Company subsidy loans can report on 1099c as income ?

Tracy, CA |
Filed under: Tax law

I was an indy contractor with an 'Unsaid" corporation. The gave me something called "subsidy loans" in which I will eventually pay back, I also earned commissions each month in addition.

My question is;

1. is the "Unsaid" corporation allowed to 1099c my subsidy loans?

or just my actual commissions?

I have hear other people who have had issues like this, others who have not. I need to know what to do in the event they do something wrong and will not correct it.

Sorry. I guess I meant 1099-MISC income. I have heard of other people who got the subsidy loan amounts in their 1099- MISC. I was running my own business / franchise. So if they do include the pay back amount / subsidy amounts with my commissions in the 1099 MISC what should I do? Sue them? Ask for correction?

Attorney Answers 3

  1. Are you sure you are referring to a 1099-C? A 1099-C is for cancellation of debt income.

    It would not be appropriate unless you were NOT paying back the subsidy loan and the corporation was writing off the debt.

    The information presented here is general in nature and is not intended, nor should be construed, as legal advice. This posting does not create any attorney-client relationship with the author (who is only admitted to practice law in the State of California). For specific advice about your particular situation, consult your own attorney.

  2. As Mr. Chen explains, a 1099-c is for debt cancellation. Yes if the debt is cancelled then the employer can send a 1099-c to you.

    This is general legal information, not intended to apply to your specific case. And I may not be licensed to practice in your particular state. Under Federal Law, I am a debt relief agent.

  3. If you are required to actually pay these back, I am not sure how they are income. But the reality is, for tax purposes these are clearly not being treated as loans. If you cannot take deductions when you pay these amounts back, you should not be forced to recognize income when you receive them. If you have a legal written obligation to pay these "loans" back, they are not income at all. But there are so many quirky industry specific accepted practices that you should speak with the CPA that prepares your taxes. This does not seem like the accurate treatment of a bona-fide loan.

    Christopher Larson
    Insight Law