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Subject:   Cash out rather than exercise
Date:   Wed, 22 Nov 2000
From:   Connie

Dear Michael,

When an individual who is not an employee for the calendar year elected to cash out, what is the reporting procedure? Will it be reported to IRS on 1099?

Thank you very much for your assistance in this matter.

Sincerely,
Connie

Answer

Date:   4 Dec 2000

Hello Connie,

I assume you are talking about an ISO.

Since the amount relates to previous employment with the company, I believe it should be reported on Form W-2.

Good luck!

Mike Gray

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IRS Circular 230 Disclosure: As required by U.S. Treasury Regulations, you are hereby advised that any written tax advice contained in this answer was not written or intended to be used (and cannot be used) by any taxpayer for the purpose of avoiding penalties that may be imposed under the U.S. Internal Revenue Code.