1099-NEC Non-employee Stock Options

[traslavina]

All the options I received (in 2017) from joining a board were exercised as a result of a change in control transaction in 2021. Today June 2023, I received a bill from the IRS as we never paid taxes on the capital gains. I never received a 1099 from the company or they sent it to the wrong e-mail back in 2021. My accountant is saying that I need a 1099 B and not a 1099 NEC- is this accurate (I only participated in 4 annual meetings as part of my board responsibilities.)

[sjrcpa]

"All the options I received (in 2017) from joining a board were exercised as a result of a change in control transaction in 2021"

I think you mean exercised and sold in 2021.

The fees for serving on the board would have been on 1099-MISC/1099-NEC. 

The sale of the stock acquired by exercising the options would probably have been reported on 1099-B, but if it was a small privately held company it may not have been.

Anyway, you surely received, and probably signed, some paperwork regarding this 2021 transaction. Give that to your accountant.

[qbteachmt]

"I need a 1099 B and not a 1099 NEC"

The1099-NEC is the compensation for the work you do. It might be cash, chickens, or value of an award. You need it if you are not on payroll, and got paid for services.

A 1099-B is a brokerage form reporting a sale of your holdings or holdings on your behalf. For instance, any required withholding from that compensation would be generated as cash by selling some of the shares you were vested or awarded, if you didn't have cash value compensation to deduct from, and if there was required withholding as a result of the pay for services and/or award of taxable value. If you didn't pay it directly, then there either is withholding that would be listed on the 1099-NEC, or no one paid it, and that means the IRS noticed.

"I never received a 1099 from the company"

Yes, you did. The 1099-NEC is reporting to you and a copy was sent to the IRS.

"I only participated in 4 annual meetings as part of my board responsibilities."

Meaningless. You might have earned $3 million. The IRS doesn't look at quantity. They look at value.

What happens is, you are awarded something of value, which is taxable. That means it is reported and you pay taxes on it. If it got overlooked, then someone needs to file an amended return. It is possible that nothing got sold, so there is no 1099-B. Or, as previously noted, it could be a private sale = the company could have redeemed it inhouse, even. That means you are looking for evidence of withholding being paid to the IRS, so get the accountant the IRS transcript that will show all of this, including if there was a 1099-B activity.

Because...You seem to be lost on the internet.

"My accountant is saying"

That means you are not a tax preparer and this is not a question involving your client taxpayer...You don't actually have a ProSeries question?

You’ve come to a Peer User community for Intuit Income Tax Preparation products supporting tax preparation professionals using ProSeries, Proconnect and Lacerte Tax Preparation programs, and you may be looking for support as an individual taxpayer using TurboTax. Please visit the TurboTax Help site for support.

And try this screen, for the various topics (subforums): https://ttlc.intuit.com/community/discussions/discussion/03/302

Your sign in user info here is the same one you can use over at the TurboTax forum.

Thanks.

[traslavina]

Thank you for the guidance. I was clearly on the wrong peer user community group. Really appreciate the direct feedback.