Stock options reported on line 7 1099-MISC

[David]

TP received a 1099-MISC for $5K reported as nonemployee compensation box 7 on a 1099-MISC. He told me this was for stock options paid out when the company was sold.

He had this in a prior year and his tax preparer reported it on line 21 form 1040 as other income and subjected it to SE tax.

Shouldn't this be reported on line 7 as wages? I'm not sure this is subject to SE tax. I can't find anything in the Intelliconnect research program that says whether this would be subject to SE tax. Kleinrock had a wage finder feature that listed the various types of income and how the income was reported - e.g. subject to FICA and medicare. I can't find a feature like this in Intelliconnect. Does anyone know if there is a "wage finder" type feature or if Intelliconnect has a section that shows how various type of income is reported?

In the meantime, I need to know how to report the information on the 1099-MISC and whether I subject the income to SE tax.

Thanks.

[SaraEA]

I had one of these this season, and my research revealed that the cashed out options are indeed subject to SE tax. Normally nonqualified options go in Box 1 on the W2 (and 3 and 5). In this case the employee wasn't on the new company's payroll yet so wasn't getting a W2 from them. The new company handled it by issuing the 1099MISC.