Stock Options?

[superman]

Clients comes in he has a 1099misc box 3 filled in with an amount. After asking about this income he states that he is doing some work for a start up company they have no money so they paid him in stocks that are valued at .10 each. My questions is how do i report this do I just put it down on line 21 as misc income or did the company mess up the reporting. Any help would be great I have never encountered this.

Superman

[Lion]

Compensation

Sounds like compensation to him for services rendered. He received stock for services. Independent contractor. Schedule C. Maybe!

[gkaiseril]

Schedule C and next year a Schedule D for worthless stock.

[superman]

Thanks

Ok that is what I thought but just wanted to verify. On the Sch D for next year is the cost basis the amount on the 1099 misc now? Of course assuming the stock goes bust and he does not end up to be a millionaire.