Residual commissions?24

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Nickname: guest
Date: 2/17/08 19:24

Residual commissions?24

My partner in a small real estate company decided to go solo. Nearly all the pending paperwork / payments have been made, but there was one closing which was delayed for several months that has finally happened. I am going to split the commission check with him. The commission is about $7,000, payable to the company (which is me, now). If I write him a check for half, how will I handle this come tax time?

Poor Taste?

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	Nickname: guest Date: 2/17/08 19:24
	At the end of 2008 you’ll need to prepare a Form 1099-MISC for the amount you paid to your former partner. You’ll send a copy to the IRS and your former partner. Your tax return will include the total received as part of your gross income. The amount you paid your former partner will be a business expense. For this transaction (and all the others too), you’ll subtract expenses from gross income to arrive at net income, which is what your tax payments are based on. So you’ll pay taxes on half of the commission, not on the whole amount. Poor Taste?