Thanks for clarifying. In this case, you would report all of the money you collect as your S-Corp's gross income. Payments you make to the Partnership for an overhead charge and their billing fees would be deductible. Same goes for all of the other professional expenses you pay each year.

The payments made for the buy-in are a little more complicated. It depends on the agreement you signed with the Partnership and how the Partership will record the payments it receives from you. The payments would either be deductible to you and reported as income to the Partnership, or the payments would not be deductible to you, and instead, you would amortize (write-off) the bulk of the amount of purchase price over 15 years. You definitely want to get clarification of this from the Partnership's CPA or Attorney so you can better understand how you'll be taxed.

Hope this helps. I think once you get this figured out, you'll be in good shape. It's the type of thing that only needs to be figured out once.

Zip Code: 01801

Hi Andrew,

I have one quick question...I believe that in general, all companies except for corporations need to be issued 1099s for payments over $600. Therefore, would I need to issue 1099s to the billing/collections company and medical group (for the overhead and buy-in fees) discussed above? Once again, any help you can provide would be greatly appreciated! Thanks!

Zip Code: 75041

The rules require that you issue 1099s to any unincorporated business that you pay more than $600. It's my understanding that includes LLCs as well.

You also need to issue 1099s to certain corporations including law firms and healthcare providers. The 1099-Misc rules can be found here:

http://www.irs.gov/pub/irs-pdf/i1099msc.pdf.

If you want my firm to help you out with this, we'd be happy to do so. Our fee is $75 for the first 1099, and $10 for each additonal 1099. You can contact me through the MDTAXES site.

Zip Code: 01801