I received stock options for 120 hours of financial services I provided to a friends company (I am not an employee).

[iancoffman]

I received stock options for 120 hours of financial services I provided to a friends company (I am not an employee). I was granted 13,500 common stock options at $.00001 in Mar 2016 and 8,000 common stock options at $.20 per share in Dec. 2016.  I have not exercised the shares, but they all have vested due to my services being complete.  Do I need to record as income?  If yes, where do i record?  If not, when do I need to record as income?  Greatly appreciate the help!

[TomYoung · Accepted solution]

I take it that this is a private company and that there's no practical way to value what these options are "worth", really.  If that's the case I'd say you have no income to report.  Once you do exercise the options - if you do - then the difference between the price you paid and the value of the stock received would be considered compensation and you should record that.  You'd report it as a form of "revenue" on Schedule C for your independent contractor work.

Tom Young