Received 1099-NEC for Equity BUT Not Fully Vested

[DIYTaxLady]

In Q4 of 2024, I joined a small startup as an advisor in exchange for equity.  I will not be fully vested until approximately Q4 2026.  My challenge is that the company sent a 1099-NEC that includes a dollar amount for box 1 (Non Employee Compensation).  I don't yet have the shares and I haven't sold them.  Yet this looks like income.  Was it correct to have received this form?  Do I need to file it?  Do I need to file any additional forms related to it?

[DianeW777]

It depends. This document does not indicate any sale, it does however indicate self employment. If you do have equity in exchange for your advisory role, and this is considered as an ongoing concern then it is self employment income. 

Another consideration is whether you have documentation of your equity in the small startup because they are considering that as your payment based on your question, as I understand it.

If you agree with the statements above, then you should consider it self employment. You would be allowed to add any expenses to earn this if you have any. This link will take you to enter your expenses, the 1099-NEC should already be the income reported here.

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