1099-NEC vs 1099-MISC

[user17709305805]

My husband passed away in 2024. I exercised his employee stock options in 2025 as surviving beneficiary/spouse. His company just sent me a 1099-NEC reporting the income. I believe it should be reported on a 1099-MISC Box 3 Other income and my understanding is that it would be considered Income in Respect of a Decedent (IRD).  I am not self-employed nor did I provide any product, service or work for the company. Which is correct?

[ThomasM125]

I believe you mean you purchased stock from his company that was associated with stock options. If so, any income associated with the discount on the stock should be reported on a W-2 form. If you can't get the company to change the reporting to a W-2 form, you can enter the Form 1099-NEC in the Wages and Income Section, then Other Common Income, then Form 1099-NEC. When you answer the questions in that section, indicate that the income was not associated with your job, you did not have a profit motive to earn the money, and you only received it in the current year. That way the income won't be considered self-employment income.

If you also sold the stock, you will receive a Form 1099-B reporting that. When you enter that in TurboTax, you will see an option to adjust the cost of the stock reported on the Form 1099-B if necessary, as often it won't reflect the discount on the purchase of the stock. You can indicate that you want TurboTax to help you calculate the adjustment or you can enter it yourself if you know what it is.