Hi everyone. If a private corporation issues stock to an individual when there is no exchange of property, or cash, or services rendered, or anything - what is the tax treatment for the individual? Is the treatment different depending on the class of stock? Depending on the timing of the issuance (at inception, or initial issuance of stock, for example)?
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Ginger Snap - Why was the stock issued?
This just doesn't "happen." Either it was a mistake, a gift by owners, etc. -
a long time ago client tried to pull this over on me
A corporation does not give somebody stock for no reason. If that is the case, they can give some to me or to you. They aren't doing that. Maybe they did it to get someone to come to work for them, then it is compensation. You could have 83(b) issues here. The most likely scenario is compensation, but you need to go back to your client and ask them to give you stock immediatly becuase they are giving it away for no reason! Or you could ask for the real story.
But one thing is for sure; there was some reason that stock was awarded and Uncle Sam probably is going to see some taxes on it.Comment
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If no one does anything, than the basis of the the stock will be zero when it is sold. I quess it should be short term CG.Last edited by BOB W; 03-19-2008, 08:23 AM.This post is for discussion purposes only and should be verified with other sources before actual use.
Many times I post additional info on the post, Click on "message board" for updated content.Comment
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