I had purchased Class B Common Stocks while working at former employer. When I left, they repurchased that with a promissory note at the same value I had purchased + interest, that was paid this year, and I had the impression I would pay tax only on the interest, so I thought they should issue a 1099 INT. But they did actually a 1099 NEC with the total value of the note + interest. Is there a way to input a cost basis for that? Is this even correct or should they actually fix it with 1099 INT instead?
It should not have been reported on a Form 1099-NEC, as that is for reporting non-wage income paid to individuals for services provided to a business. Since you sold stock, that should be reported on a Form 1099-B. Since you had a promissory note, the interest on that should be reported on a Form 1099-INT.
So, just to make sure there's nothing left here. The company says they are correct and they cannot issue another document that is not the 1099 NEC. They said I should be able to input the cost basis (original amount) in order to find the interest, but a 1099 NEC does not have an entry for cost.
What should I do in this case?
Instructions below will show you how to report the income. Some companies don't seem to understand their reporting requirements because they can be complicated.
The purchase of the Class B Common Stock should be entered as a sale of stock (usually in Form 1099-B). You will select as though you did receive a 1099-B and enter the cost, purchase date, sales price (promissory note amount) and date of sale. Choose to enter it a different way and enter it yourself (no import).
Next enter the interest income for 2024. You should have an amortization schedule showing the interest, note amount/principal and total payment for each month for the term of the contract.
Reminder: You do not actually have these forms. Keep the 1099-NEC in your file with an explanation that it was the wrong reporting form for sale of stocks and interest paid on a promissory note.