My husband and I in partnership with another individual sold a commercial property this past May. It was an investment that went sour. The property sold for $480k. Hubby and I received $63k, Partner received $53k, our Realtor got about $25k, not sure what was paid to attorney, about $16-18k went towards past due mortgage payments. That's about as much as I remember.

This week Hubby and I received a 1099-S which states that we received $216k. Friend received one that states that he received $184k. This doesn't seem right to us. Shouldn't the 1099-S indicate only what we actually received?

Basically the IRS believes that we made $216k on this real estate deal and our partner $184k? Can we say otherwise? What do we do?

The 1099 should report the gross amount received for the sale of the property. On your tax return (or on the partnership's tax return) the cost of the property should be shown as a deduction to arrive at a net gain or loss. The amount you are taxed on is the net gain (sales proceeds less the amount paid for the property). The reason that you received less cash at sale is because you borrowed cash to purchase.

I was so upset when I saw the 1099-S. I quickly called the attorney who helped us with the sale and he said "you would just report what you recieved per your HUD statement". Sounds similar to what you are saying here. I will just give all paperwork to our accountant along with copies of the checks written out to us which totaled ($63k just in case).

Thanks for explaining so clearly.

IntlTax says it very well.

Glad you agree.