[Peter]

It was just pointed out to me on my Facebook page from an astute observer that Lending Club has updated a lot of their help information when it comes to taxes.

In previous years Lending Club has only included notes that earned more than $10 interest annually on your 1099-OID. This basically excluded every $25 note and many $50 notes. But the new help section offers no such wording. It looks like Lending Club will move in alignment with Prosper here and include all your earned interest on your 1099. Read the updated help on taxes here:
http://www.lendingclub.com/kb/index.php?View=entry&EntryID=240" class="bbc_link" target="_blank">http://www.lendingclub.com/kb/index.php?View=entry&EntryID=240

In reality this shouldn't matter because the IRS demands that you include all interest whether or not it was included on your 1099. But I expect Lending Club will be getting a ton of phone calls from investors this tax season wondering why they suddenly have a 1099 for the first time.

Here is my post last year on taxes - I will be updating it for 2013 with new guidelines.
http://www.lendacademy.com/a-guide-to-filing-your-lending-club-and-prosper-taxes/" class="bbc_link" target="_blank">http://www.lendacademy.com/a-guide-to-filing-your-lending-club-and-prosper-taxes/

[SBryantMS]

Peter:

Several points to consider:

1) Lending Club still states the following:

"If you do not receive any Form 1099s from Lending Club or FOLIOfn by January 31, it likely means that your interest and other payments did not meet Form 1099 criteria for receiving a form."

2) What it appears to me is that Lending Club is treating the "Notes" the same as a "discounted bond", thus meeting the IRS requirement of the 1099-OID in active years and a 1099-B in the year that the bond matures.     

     So it is possible that many lenders will still not receive 1099s as the IRS only mandates a 1099 of any type when the reporting amount is $10 or more.

3) Since Lending Club is now going to issue 1099-OIDs on notes issued after 10/14/2008, what is interesting is that if they issue 1099-OIDs for 2012 then they should be required by the IRS to issue a matching 1099-B for 2013 for ALL notes that "Mature" in that year.  In the 1099-B case, lenders may still be under the $10 rule.
 

Bottom line, tax reporting on a retail 800+ loan portfolio could become a labor intensive effort as the 1099-B will require a basis amount and the total of the prior years OID amounts to avoid DOUBLE taxation. 

My concern is that they maintain the $10 rule and don't provide 1099s under that amount. 

I understand that you have contacts at LC and hope that your new Tax blog entry can clarify their future direction.

[yojoakak]

I'd prefer if they issued a 1099 for the full amount, because then at least the numbers would match up.

I just don't want to get a 1099 for $20 bucks or whatever and not have that number match anything else on my tax return.

[rawraw]

I complained last year how annoying LC was for filing taxes (For example, having to look at every statement to add up the total servicing fee).  They said they would look into ways to making it easier.