by Jerry Moret
For providing consulting services to a company, I was paid both in cash and with 20,000 shares of restricted stock valued at $8,000. The company later went through a recapitalization, which greatly diluted the share value. The company is not public. How should I treat the stock on my tax return?
I hope you received a Form 1099 Misc (Miscellaneous Income) from the company for the cash and stock you received. If not, talk to your contact there. You should also find out how the company determined the value of the stock. You might suggest that the stock was overvalued at $8,000 since the company is not publicly traded, and, therefore, you would have difficulty selling it. You should also find out if the company was considering recapitalizing the stock when it issued it. That could also lower the stock's value. Regardless, you would need to report the value of the stock as miscellaneous income on your return.
Jerry Moret is principal of Gerarde Moret, CPA. He can be reached at (707) 569-0464..
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