If you have a 1099-MISC with your SSN on it, your references to shares, ratios and the such was misleading. With an amount in box 3, as far as the IRS is concerned, it's SE income. Especially if this is something that will repeat itself from year to year. Sounds to me like the income is not reported correctly by the issuer of the 1099-MISC. But that's not your problem. To enter the information you still enter it as a 1099-MISC, but there's a special way in the program so it's not on SCH E or C. The method is below.
Reporting 1099-MISC (box 3 or box 7) that is not self-employment income
Under the Wages & Income tab (or Personal Income tab) scroll down to Other Common Income and elect to start/update Income from form 1099-MISC. Then click YES to indicate you have a 1099-MISC.
Enter the 1099-MISC exactly as printed, and then Continue.
Enter the reason you got this money – be it scholarship, bonus, streaking butt naked across the 50 yard line of the super bowl, whatever. Then continue.
Select None of these apply, then Continue.
Select No, it didn’t involve work….. and Continue.
Select ONLY the tax year for which this specific 1099-MISC was issued. Do not select the year that you received the 1099. Select the year for which the 1099-MISC was issued. Select no other year. Then Continue.
Select No, it didn’t involve an intent to earn money, then Continue.
Select NO, then Continue.
Click the DONE button, and that does it.
As you can see, the above is not true in your case, because it does involve an intent to earn money. So if you told the truth, the IRS considers you self-employed. This tells me the 1099-MISC is not the correct vehicle for the issuer to be using. I'm confident any competent CPA would agree.
