A new client came in. He said he got some company stock and made a 83(b) election with his employer/IRS at the time. His W-2 is large and probably includes some stock options (he doesn't know). He also has a K-1 from the company showing only short and long term gain of about $400K No taxes on the K-1 amount. There is no 1099 for sale of stock. Needless to say he owes a lot. Should I be looking for something relating to the election? Or is all I can do in preparing the taxes is to rely on the company to correctly report the income and withholding on the W-2……… and also rely on the K-1? The client really doesn't know what's going on and I'm not sure what to have him ask, if anything.
You say he is an employee, so what entity issued him the K-1? Partnership or S-corp? How did he come to be a partner or shareholder? Is this the first year for the K-1? Have you seen the 83(b) election statement? It should include number of shares transferred, price of shares, FMV of shares, etc. Maybe the K-1 has nothing to do with the 83(b) property transferred to him as compensation.