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QUESTION DETAIL
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Our business is a multi-member LLC taxed as a partnership. We provide child care through a contract with a qualified child care facility, which is a licensed home-based provider. We claim the General Business Credit for 25% of our child care contract expense via Form 3800. The child care facility is operated as a sole proprietorship. Should our business be issuing a 1099 to the proprietor? If so, how do we account for this, since my understanding is that we may not both deduct the cost and claim the credit on which the cost is based?
ANSWER
The BIDaWIZ Team's Answer:
Yes, you should be issuing a 1099-MISC form if the amount paid is $600 or more. The cost would be an eligible expense for claiming the tax credit less any double benefit provision as per the Internal Revenue Code Section 45F.
