When will I be taxed on non-qualified stock options?
February 21, 2000
Subject: Tax Question
Date: Fri, 14 Jan 2000
I found your site via Altavista and found your discussion of stock options interesting. I wondered if you could answer a question for me.
I’ve contracted with companies and received stock instead of cash as compensation. Since the companies are raising money, there is a FMV for the stock based on the price that they’re selling it to new investors. I’ve completed the projects in 1999 and the companies owe me the stock, but they haven’t sent me the shares yet. If I receive these shares in 2000, will my tax liability be for 1999 or 2000?
Date: 19 Jan 2000
From what you have told me, you haven’t received the shares yet.
If your independent contractor business is on the cash basis, income isn’t taxable until it’s received (unless you had the option of receiving it sooner.) Therefore, it appears you won’t be taxed until you receive the stock in 2000.