1099-NEC for exercising Stock Options - But never an employee

[kingofdirt]

I was given a stock option grant 10 years ago for helping a former colleague start up a business.  I was never an employee of the company and provided advice on request and did some research to help them launch the business.  I helped them periodically over a 4 - 6 month period.  

   I exercised the options last year and received a 1099-NEC.  How should I enter this information into Turbo Tax Deluxe?  Thanks for your help.

Andy

[DavidD66 · Accepted solution]

The amount reported on Form 1099-NEC should be the amount of the discount you received on the exercise/purchase of the stock. If so, you enter the Form 1099-NEC in the Wage and Income section of TurboTax, then 1099-Misc and Other Common Income, then Income from Form 1099-NEC. Indicate that the income was not related to your job, was not earned in the prior or next year.  Also indicate that you did not have a profit motive associated with income. This will result in the income be treated as "other income" as opposed to self-employment income and subject to self-employment tax.

[fishnose99]

@DavidD66 My spouse (a physician) was granted NSOs 10 years ago, as an incentive, when she was one of the first practices to partner with an physician enablement organization. She remains self-employed and not an employee. She exercised these NSOs this year. She received a 1099-NEC showing the amount of the discount she received on the exercise/purchase of the stock. Using an earlier response,  provided by @DavidD66 on February 28, 2026 at 7:30pm to "kingofdirt", I've entered the 1099-NEC information fully as was described and, after reaching the "Income from Form 1099-NEC" section and entering the info on the 1099-NEC, the answer from @DavidD66 says to take these next steps:

"Indicate that the income was not related to your job, was not earned in the prior or next year.  Also indicate that you did not have a profit motive associated with income. This will result in the income be treated as "other income" as opposed to self-employment income and subject to self-employment tax."

I don't see how to make that set of indications. Can someone help walk me through that in TurboTax Home and Business 2025?

I don't see where you make these indications.