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Anonymous VP, Finance

Do we need to issue a 1099 to an investor who exercised penny warrants?

Asked on Dec. 22, 2016

Oddly - I can't seem to get a definitive answer from our accountant on this! We issued penny warrants for common stock to an investor in connection with a loan they provided. The investor exercised the warrants at $0.01 per share, while the 409(A) valuation valued the common stock at $0.13 per share. Do I need to issue the investor a 1099-ord for the # shares X (0.13-.01)? I am finding conflicting information on the internet. Seems like it would be a common situation. Any help is GREATLY appreciated.

Answers

Wayne Spivak's headshot
Wayne Spivak President & CFO • Dec. 26, 2016

This may help:

http://www.pwc.com/us/en/cfodirect/assets/pdf/accounting-guides/pwc_stock_based_2013.pdf

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