Ashburn, VA asked in Tax Law for New York

Q: If I receive publicly-traded stock in lieu of cash for services rendered, how is that taxed?

I assume that I would have to pay short-term capital gains taxes based on the immediate market value, then if I immediately sold it, would I then pay capital gains taxes again based on the original owner's cost basis? Thank you in advance for your insights.

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1 Lawyer Answer
David Ostrove
David Ostrove
  • Tax Law Lawyer
  • Los Angeles, CA

A: If you received it for services rendered. The value of the Stock is ordinary income to you. And, the value is, therefore, your tax basis. If you sell it at a gain, the difference between your selling price and the value when you received it for services rendered is your capital gain; short term or long term depending on how long you held the stock. Under your facts, the original owner's cost basis is not your basis. That would be true for a gift, but not when you received it for services rendered.

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