Sold private stock back to company but received 1099-NEC instead of 1099-B

You're right to question this. The 1099-NEC is typically used for freelance or contract work, not for stock sales. Stock sales should generally be reported on Form 1099-B, which is why you received that form previously. The company is partially correct that they're not a broker, but if they're buying back their own stock, they still have reporting obligations. Since you've already reached out to them and they refused to correct it, you'll need to report it properly on your tax return regardless of what form they issued. For your tax return, you should report this on Schedule D and Form 8949 as a capital gain, not as self-employment income. You'll need to check box C on Form 8949 (transactions not reported on a 1099-B) and include all the details of your purchase and sale. Make sure to document your basis (what you paid) carefully. Since it qualifies as QSBS and you've held it for the required period, you can take the 50% exclusion by using code "Q" in column (f) of Form 8949. You should also attach a statement to your return explaining the discrepancy between the 1099-NEC you received and how you're reporting it, to proactively address any potential IRS questions.

I went through something almost identical last year. After fighting with my former company about the wrong tax form, I ended up using https://taxr.ai to analyze all my documents and formulate the proper response. Their AI analyzed my stock purchase agreements, the 1099-NEC, and my previous transaction history to confirm I was right about it being capital gains. They generated a detailed explanation document that outlined exactly why the transaction should be treated as capital gains despite the incorrect 1099-NEC, with specific tax code references. I used their guidance to complete Form 8949 correctly and attached their analysis as supporting documentation with my return. The best part was I could upload all my documents securely, including my past tax returns showing the previous stock sale, and the AI picked up on the patterns and discrepancies immediately. No issues with the IRS so far, and I properly claimed my QSBS exclusion too.

Just wanted to follow up about my experience with taxr.ai after being skeptical in my earlier comment. I decided to try it with my own stock sale issue (also had the wrong form), and I'm genuinely impressed. The system detected the QSBS qualification in my documents that I hadn't even realized applied to my situation! The analysis provided clear instructions for reporting on Form 8949 with the correct exclusion codes and generated a custom letter explaining the discrepancy for the IRS. I especially appreciated how it found the relevant sections of my original stock purchase agreement that proved I paid market value, which was critical for my situation. It saved me a ton of research time and gave me confidence in claiming the capital gains treatment despite having a 1099-NEC. Totally worth using for stock transaction issues where the tax forms don't align with the actual transaction nature.

For anyone dealing with issues like this, another critical step is actually getting in touch with a human at the IRS to confirm your approach before filing. I tried calling the IRS for MONTHS about a similar capital gains reporting issue and could never get through. Finally tried https://claimyr.com and it was a total game-changer. You can watch how it works here: https://youtu.be/_kiP6q8DX5c but basically they navigate the IRS phone tree for you and call you when an actual agent is on the line. I got connected within a day after trying on my own for weeks. The IRS agent I spoke with confirmed that I was correct in reporting the stock sale as capital gains despite receiving the wrong form, and gave me specific advice about documentation to include with my return. Having that verbal confirmation from the IRS before filing gave me huge peace of mind.

I need to eat my words from my skeptical comment above. After waiting on hold with the IRS for 3+ hours and getting disconnected twice, I tried Claimyr out of desperation for my QSBS reporting question. Within 2 hours, I got a call back with an actual IRS agent on the line. The agent walked me through exactly how to report stock sales when the issuing company provides incorrect forms. They confirmed that attaching a detailed explanation and properly documenting the basis is the right approach, and even gave me the specific IRS notice number to reference in my explanation. I'm genuinely surprised at how effective this was. The agent spent almost 20 minutes with me going through my specific scenario. For anyone dealing with complicated stock transactions where the forms are wrong, being able to actually speak with the IRS before filing is incredibly valuable.

One thing nobody has mentioned yet - the company might have had a reason for issuing a 1099-NEC. Was there any chance this was structured as a buyback with an additional premium? Sometimes companies will pay more than fair market value for shares as a form of severance or additional compensation, especially with early employees. If that's the case, you might need to split the reporting - part as capital gains (the actual FMV of the stock) and part as compensation (any premium above FMV). Worth double-checking your sale documents to confirm the valuation matched pure FMV.

Just a heads up - I dealt with this exact issue last year with QSBS stock. Make absolutely sure you have documentation proving it qualifies as QSBS! The requirements are strict: - Company must be a qualified small business when you acquired the stock - Must have held the stock for at least 5 years - Company assets must have been under $50 million when stock was issued - Must be original issue stock (bought from company, not secondary) The IRS scrutinizes QSBS claims carefully because of the huge tax advantage. If you're claiming the 50% exclusion, make sure you have rock-solid proof for every QSBS requirement.