1099 NEC from company acquisition payment - how to report it

[huangric198]

My old company got acquired in 2020 and I received payment of 1% of the purchase price (based on the share of the old company) in the year 2020 (90%) and 2021 (10%).  I received 1099-NEC from the company who acquired the old one for both years.

In the 2020 tax return, I reported the income as other income from "sporadic activity or hobby" and got audited by the IRS and they fined me $1200 for not claiming it as business income. 

In the 2021 tax return, I am trying to report it as business income (sole proprietorship) with schedule C and schedule SE, which ask about company name, business code, accounting method.  

My question is what should I answer about the business code, accounting method, company name, etc.

Thanks very much. 

[Critter-3]

Since it doesn't matter : 

company name  use your name  & home address

business code  999999 

accounting method  cash  

[Mike9241]

we can't see the agreement between you and the new company but if this is payment for your ownership in the old company, the new company may be misclassifying the payments.  apparently, you are not an employee of the new company because the payments should have been on your w-2s. and if you are not performing services for the new company it's probably wrong for them you issue a NEC with the amount in box 1.  if the payments are for your ownership in the old company they likely should be treated as capital gain to the extent it exceeded your basis. no SE tax. if there is enough $ involved it may be worth your while to consult a tax pro. there is too much info missing to give a good answer. 

however, if you don't want to consult a pro 

company name - anything you want - like myoldecomp

business code - 999999

accounting method - cash