Fully vested stock in lieu of cash for Royalties

USA Discussion in 'Businesses / Corporations' started by fisheka, Feb 11, 2019 at 9:53 PM.

  1. fisheka

    fisheka

    Joined:
    Monday
    Messages:
    2
    Likes Received:
    0
    I have a contract for use of my invention (patented) with a privately-held very small start-up corporation. The payments are royalties. In 2018 I received $10k cash payments for the royalties in the first half of the year, but agreed to take $10k in the form of the corporation's stock (fully vested) for the second payment of the year.

    1. What should I expect the 1099 MISC from the corporation to look like (what figures in which boxes)?
    2. I still have the stock, which has not really had a change in per share value. How do I treat the "in lieu of cash" money on my 1040 Schedule C?
     
    fisheka, Feb 11, 2019 at 9:53 PM
    #1
    1. Advertisements

  2. fisheka

    kirby VIP Member

    Joined:
    May 12, 2011
    Messages:
    1,446
    Likes Received:
    200
    For question 1, the 1099 should show 20,000 in box 2 "Royalties".
    For 2, before you go there check with a tax pro on whether you should make an IRC 83 b election.
     
    kirby, Feb 12, 2019 at 2:40 PM
    #2
    1. Advertisements

  3. fisheka

    fisheka

    Joined:
    Monday
    Messages:
    2
    Likes Received:
    0
    Thank you for your reply.

    I believe that the 83b election must be completed within 30 days of accepting/receiving the stock so it's too late for that.
     
    fisheka, Feb 12, 2019 at 4:40 PM
    #3
    1. Advertisements

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments (here). After that, you can post your question and our members will help you out.