TaxAlmanac - Discussion:Restricted Stock, 83b & B2B Grant
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20 July 2010 |
| I have a client who runs a company
and received Restricted Stock Grant couple years ago from a company they were providing service for. These shares vested over the years but since this company was not an employee there was no ordinary income taken at the vestign dates. Recently, stock granting company was bought by another and my client was sent the gross proceeds for the vested shares. I'm aware under a Company-To-Individual that ordinary income would have been delt with thru stock sale or 1099 during the vesting but this was not done. Now, the accouting folks at the new company are trying to determine next-steps. I have done some research and it seems straight forward if the grant was given to my client as an individual....1099-MISC. However, since the grants were given company to company will he receive a 1099 or is it just up to him to determine the ordinary vs cap gains calc/taxes ? |
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21 July 2010 |
| My client did not fill out a Sec 83b
election at grant. Also the company who granted the restricted stock did not sell or 1099 him in any of the vested years for ordinary income on the vested FMV. Basically, these shares were left vesting and when the company was bought he was sent a gross proceeds check for the FMV x vested shares. His request is to be taxed at ordinary income rate of $0 to FMV at vesting dates, then cap gain for the vesting costs to sales price. I'm in discussion with CFO of company who bought this other company and he wants to take the simple way of 1099 MISC to him this year for the total gross proceeds. I asked why the previous company did not 1099 during vesting years and he has no answer. I also pointed out this was not a grant to an individual but B2B. I'm trying to research that thought to see if that truly helps. Any thoughts in how I can pursue is appreciated.
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21 July 2010 |
| My thought on the B2B and no 1099 MISC is: http://www.irs.gov/instructions/i1099msc/ar02.html
Exceptions. Some payments are not required to be reported on
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21 July 2010 |
| Update, talking the CFO he now says
he agrees that a 1099 is not required but he will still post the entire gross amount as a deduction on their corporate taxes. His comments....... If I am audited then I will provide all of the detail as to who
I think he may have agenda from their tax side and he is also
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July 21, 2010 |
| You do get that corporations have to pay their income taxes, even though they generally don't get 1099's, right?
A filled-out profile might have made that question less necessary.
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