I'm looking for a general answer on how this situation is treated for tax purposes, not how to report this situation when doing my taxes (although that would be interesting as well). The numbers below are made up, but generally representative of the real numbers.
I worked for a private company, and as a bonus (of sorts), I was awarded $10,000 in company shares. The taxes for this award were withheld from my pay (not sure if this even matters).
I left the company six months later, and the company gave me the option to keep the shares or sell them back to the company. I chose to sell. The shares had lost value by that point, and I received a payout of $8,000.
So from a tax perspective, what actually happened? Did I receive $10K in income and take a $2K capital loss? Did I receive $8K in income?