Taxpayer receives Offer for Shares in C Corp

[S T]

Taxpayer as an valuable employee receives an offer from Employer - which is a C Corp
Purchase agreement is for 2 shares of Stock in C Corp - payable over 10 years
Taxpayer remains as an employee receiving W-2 form for Wages

C-Corp is going to distribute an amount "gross up" for the purchase of the shares (annual amount of payment - over 10 years - base purchase amount approximately $ 20,000) plus what the Employer calculates as taxes on this amount.

My question is communicating with attorneys, etc, drafting all of these documents, A 1099 will be issued (confirmed they are not processing through payroll) will the 1099 be a "dividend" or "non-employee comp"

Obviously 1099 Div is not subject to SE - however, 1099 Non Employee Comp will be subject to SE

Trying to set up Estimated Tax Payments for 2017

Thoughts

Sandy

[Roland Slugg]

Taxpayer remains as an employee receiving W-2 form for Wages ...

... will the 1099 be a "dividend" or "non-employee comp"

There shouldn't be a 1099 at all. An employer can't report a portion of an employee's wages on a F-1099 and the rest on a W-2. The payments are additional remuneration, so they should be included on his W-2. Surely the employer will want to deduct the payments, so they aren't a dividend. Furthermore, how can there be a "dividend" of $20,000 on two shares of stock, unless there is a dividend of $10,000/share on all the other outstanding shares.

The stock purchase bonuses will be additional W-2 wages, pure and simple.

[S T]

Thanks Roland,

Your outline is what I thought - should be through payroll, however, that is not the information I am receiving from the 3rd party setting up the Stock Purchase and attorney, question out to the Accounting Firm.

Obviously I have no control - I am representing the Taxpayer and trying to plan for Estimated Taxes for 2017.

Sandy

[TAXNJ]

Thanks Roland,

Your outline is what I thought - should be through payroll, however, that is not the information I am receiving from the 3rd party setting up the Stock Purchase and attorney, question out to the Accounting Firm.

Obviously I have no control - I am representing the Taxpayer and trying to plan for Estimated Taxes for 2017.

Sandy

Is this a stock option? If read your original post correctly the employee is "purchasing" the stock vs Corp "stock for services" which may take this scenario down a different path than a W-2 path scenario.

But with the limited information given to you places you in a difficult planning situation. Think best approach is to get necessary information from the attorney (hopefully a Tax Attorney) as to the stock structure (strategy) being developed.