For an 83(b) election, do I need a 1099-MISC if I am not a W-2 Employee?

Question

I am working as a contractor with a startup company. The only compensation I am getting is RSU's. I was given the RSU's last year and made the 83(b) election within 30 days.

I have been trying to figure out what I need to declare on my taxes this year. It seems like everyone online is saying that the FMV of the stock should be included in my W-2, but since I am a contractor, I would expect it to be on some sort of 1099-MISC. However, I asked the company if they are sending me a 1099-MISC and they told me that I probably wouldn't get one because the stock wasn't worth much when I made my election and I don't need to pay taxes on it because not much has vested yet.

This doesn't seem right and seems to be contrary to what an 83(b) election is. The company gave me the 83(b) form which I sent to the IRS and under section 6 it says:

The fair market value of such property at the time of transfer (determined without regard to any restriction other than a restriction that by its terms will never lapse) is $1,000

and under section 7 it says

The amount paid for such property is: intellectual property valued at $1,000.00.

So is $1000 the amount I need to add to last year's income and should the company be giving me a 1099-MISC showing that amount? Or is there any truth to what the company is saying?

Answer 1

So is $1000 the amount I need to add to last year's income and should the company be giving me a 1099-MISC showing that amount?

Yes. You need to add it to your income whether they give you 1099 or not. It's not 1099-MISC, it should be 1099-NEC since it's for performance of services.

Or is there any truth to what the company is saying?

It sounds like a convoluted way for them to say that it is compensation for your work without saying that it is a compensation for your work. It is likely that if IRS decides to look closer you'd be classified as an employee rather than a contractor, but they're trying to say that they're buying intellectual property from you instead of actually employing you.

However this may also cause a problem, since Sec. 83(b) specifically talks about compensation for performance of services and in your declaration you're saying that you contributed IP in return for the shares.

I don't need to pay taxes on it because not much has vested yet.

The whole point of the 83(b) election is that you don't pay tax at vest but rather at grant. This sentence makes no sense in the context of your question.