Got a 1099 form for money my brother gave me?

Hi,
Last summer we were in foreclouser, big time cc debt just no way out. Well i had to swallow my pride and discussed how hot water we were in. my grand father, then my father both now pased away had a large company. my older brother Tom now owns that company and now a multi millionare, while me and my other brother struggle day to day. My mom asked him to help us out. He gave my mom a check for us for 75k. My mom made sure our house payment was up to date, paid off all of our debts and the rest 10k is put away in a emergency fund. About the same thing with my younger brother erics family. Both Eric and my self got a 1099 form from Duffy companies, Toms company for that amount he gave us. Now i hear we have to put this down as income, we have tried to contact him, but he is in europe traveling. i dont know here i am struggleing and 75k is pennies to him. I am so pissed now because he has gotten everything in life.

A corporation cannot give someone a gift, so the money he (The Duffy Company) gave you was characterized as compensation by him. It's unfortunate for you, tax-wise, but your brother's company can write it off their corporate taxes.

Did you sign a promissory note? Is it your intention to pay this money back with interest? If not, then you're stuck with taxable income. If your brother had given you money out of his own pocket, you would have not had tax implications, but he personally would have had a gift tax issue.

Be thankful that someone bailed you out and work something out with the IRS to pay the taxes on this amount.

Your brother erred. Borrowed money is not income to the borrower so unless you did something to earn it, you will not owe tax on it. Be prepared to explain this to IRS.

Spend some of the emergency money on some spelling lessons.

your brother is trying to pull a fast one, the only way that you can serve a 1099 if you were to work for his company or to do services for his comany which he would need invoices for that, but you did not and you can prove that, you can't 1099 on a gift and thats what it was a gift from your mother.

Any form of income you receive is taxable. Therefore, you'll have to state it in your income taxes. I believe your brother is using this $75,000 that he gave you as a deductible on his side, so that's why you're receiving a 1099. Most likely, your brother hired an accountant to do his taxes and he had to state where the $75,000 went. Since the money has already been reported to the IRS, it's quite hard to erase that. Maybe you're better off selling the house instead and renting instead?

It doesn't appear to be borrowed money... If the money did come from the company... They have to 1099 you as an individual. A cash payment from a company to an individual above $600 has to be 1099'ed. They would be breaking the law otherwise.

If the payment went to your mom... Then she should have gotten the 1099.

I would be pretty angry too. If the money was a gift to you and your brother yo do have to claim it as income.. If it was a loan and you are making payments you do not. If it was a loan and you stop making payments and he forgives the balance you do have to report the balance as income. If he gave the money to your Mother SHE has to report it as income. My brother wouldn't have given or loaned me a dime.

I am sitting in awe at some of the replies you received. Mrs. Apple, WRONG.

Mikeey, WRONG, the recepient of a gift does NOT pay any taxes on the gift the giver pays any taxes due. There could be a side deal between them but with IRS it is the giver.

As stated you should never have received a 1099, based on the info you have given us. But since you have it will now haunt you with the IRS until it is clarified.

ADDED
My reply to Mikeey was based on information that has now been deleted from his/her post!

Your brother is a jerk. A rich jerk maybe, but a jerk. But you already knew that. Does your mom know about this? She should kick his backside.

And since you didn't do work for the company, it's actually illegal for him to send you the 1099 and try to write it off as a business expense - a gift to family is NOT a valid business expense. You could report him to the IRS, but that probably only makes a bad family situation worse.

Good luck.

Hello there,

Before you start kicking your brother - a few things you should be aware of, and talk to your brother about.

1. If your brother gave you/your mom the money as a gift (out of his pocket, not the company books), then you pay no taxes on it. In fact, he would need to report it to the IRS and pay taxes/take credit for it. I will not go into the details here, since it seems evident that the money came from the company.

2. If your brother gave you the money from his company books, then it is not a gift from a brother per se! He will need to send you a 1099, and you will need to report it as income.
How he handles it for the company tax filing is another issue (justifying a gift like that), and I know nothing about it, so I will stay away from it.

Overall, don't let the responses here cause a rift between you and your brother, and don't let your jealousy cloud your thinking.
You should be thankful that he helped you out - there are a million people out there who didn't get help from their closest relatives, so be thankful.

Talk to him, and discuss with an accountant - but don't let your jealousy (which is quite evident in your question) morph the facts.