Client, a plumber, retired during 2019 and filed a final Form 1120 for his corporation.  He performed no services during 2020.

Throughout 2020, an unrelated party paid him $600 per month to use his plumbing license.  (Please don't question the ethics or legality of this.  I'm not.  My concern is the tax treatment, not whether it's legal to do plumbing work under with another party's license.)

The payor reported the payments on Form 1099-NEC, as nonemployee compensation.  I believe this is wrong.  Client/payee did no work whatsoever; he didn't even act in an advisory capacity, and he wasn't operating a trade or business in any manner.  I believe the payments should be Form 1099-MISC, Box 3, not subject to SE tax.

Thoughts or opinions?