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How to report "severance" bonus NOT on W-2? 1099? Other?

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      02-03-2004, 02:30 AM
A company I worked as an executive for in 2003 was sold to
another firm. On thh official date of the sale of the
company, my position was done away with and I no longer
worked for the "new" company - but I received 2 different
"severance" payments.

1) I received a series of normal payroll checks from the
"new" company in accordance with an employee agreement /
severance package. These were all reported as normal W-2
income and had payroll deductions.

2) I received a lump-sum bonus payment from the INVESTORS
in the old company, not from the old or new company
themselves. No taxes were withheld and (to date) I have not
received a 1099 or other tax-related document from them.


How (exactly what IRS form and line item) should this
lump-sum bonus be reported? My guess is a 1099-MISC under
Line 7 - Non-employee income and that it should be reported
as "wages" - as opposed to "business" or "farm".

(I should note that I do not think that this "bonus" would
be seen as a "golden parachute" as the amount was roughly
1/10th of my yearly income.)

I also incurred a decent amount of legal fees regarding
these transactions, so am I better off reporting this as
some sort of "consulting income"?

I appreciate any and all suggestions on what makes the best
"tax" sense.


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