Ask Experts Questions for FREE Help !
Ask
    Naini's Avatar
    Naini Posts: 4, Reputation: 1
    New Member
     
    #1

    Oct 15, 2007, 06:56 PM
    Stock Byback - 1099-D
    Last year I purchased stock from the company I worked for. I live in MA and the company is based out of CA. In May of this year, they had to close the MA office and layoff everyone. I requested that my stock be bought back, since I was laid off and my husband got laid off a month later. I had used equity in my house to purchase the stock. Now it is the middle of Oct and neither my husband or I have found work. So... needless to say, I needed that money to go towards my home equity loan.

    Unfortunately, a meeting was held and they were only willing to buy the stock back at 7.50 a share. I had purchased 200 shares at 25.00 each - thus a 5,000 investment.

    I would only receive 1,500 back. However, the president, who is a great guy and cares for his employees, past and present stated he would send a check for the remainder amount of 3,500, but had to send it as a bonus and told us we would have to pay taxes on it. Then, something was mentioned that we would need to claim it on a 1099-D (or maybe he was claiming it on a 1099-D). I looked up what a 1099-D was used for and it states dividends and stocks. Well, that doesn't make much sense to me if he is giving it to us as a bonus and we have to pay taxes on it as if we just received it as part of payroll.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
     
    #2

    Oct 16, 2007, 08:19 AM
    If he IS giving it as a bonus, the payment should be covered in your W-2.

    If he is giving it under a Form 1099-DIV, that is BETTER for you tax-wise, as it will be subject to only income taxes. The FICA taxes (Social Security and Medicare) will not apply.

    You will be able to claim the $3,500 loss on the stock on Schedule D. If you have no other capital losses, $3,000 of the loss can be claimed in 2007 against other income; the remaining $500 will be carried forward to 2008 to be claimed then.

Not your question? Ask your question View similar questions

 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

Accounting for treasury stock used in stock dividend [ 1 Answers ]

How do I account for treasury stock use in a stock dividend for preferred stock? What would the journal entry by? I don't believe I should debit retained earnings for this transaction, but I'm not sure what account to debit. Please Help

Absorption Costing - Opening stock and closing stock query? [ 3 Answers ]

Hi guys, I have an absorption costing query on the profit statement, here are the notes: Selling price per unit = £20 Sales for year 1 = 10,000 Production = 20,000 Production Cost Per Unit = £10 YEAR ONE

Stock Split and Stock Dividend Differentiated [ 2 Answers ]

What are the differences between the accounting and securities market between the 2 methods of increasing the number of shares outstanding. The 2 methods are stock splits and stock dividends.

Stock dividend/ stock split? [ 1 Answers ]

Hi all, Let's say if my company began 1 Jan 2006 with 200,000 shares of $1 par value common stock outstanding. The stockholders equity is as follows: Stockholders equity Capital stock: Ordinary share, $1 par value, 1,000,000 shares authorized, 200,000 shares issued and


View more questions Search