Your employer did not report the bonus correctly. The change of ownership isn't the problem. All payments from an employer to an employee are supposed be treated as wages and be included in the employee's W-2. It doesn't matter whether it's regular pay, a bonus, or some other special payment. Form 1099-NEC is for "nonemployee compensation." But you are an employee, not a nonemployee. All of your compensation from your employer is employee compensation and should be included in your W-2. However, there is a way to report the 1099-NEC correctly on your tax return, in spite of the employer's error.
When you start to enter the 1099-NEC in TurboTax you will get a screen that asks "What type of income in on your 1099-NEC?" Select "Income that should've been reported on a W-2." Then click Continue. On the next screen enter the information from the 1099-NEC. The next screen asks if you also got a W-2. Answer Yes.
TurboTax will include Form 8919 in your tax return. The bonus will be reported as wages on Form 1040 line 1g. Form 8919 calculates the Social Security and Medicare taxes that your employer should have withheld on the bonus. The total of these taxes will appear on Schedule 2 line 6 and will be included in your total tax liability. It will not be reported as a business, and you will not have to pay self-employment tax.
This is actually not an uncommon situation. Employers sometimes report a bonus or other special payment on a 1099-NEC either out of ignorance or to avoid paying the employer's share of Social Security and Medicare taxes and other payroll taxes.
