We have a C corporation with one person as the shareholder. We receive mortgage payments which is secured by the property. The mortgage payments are then reimbursed to the shareholder who lent the money. How do we record the 1098?

ANSWER

The BIDaWIZ Team's Answer:

There are two separate loans. One loan from the shareholder to the C Corporation as a shareholder loan and then another loan from the C Corporation to the borrower as a mortgage. As such, they are booked separately. The borrower will issue a form 1098 to the C Corporation and the C Corporation will issue a form 1099-INT to shareholder for the loan.