Discussion:Employee Contract Buyout

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Discussion Forum Index --> Tax Questions --> Employee Contract Buyout

San Diego (talk|edits) said:

10 January 2007
Capital Gain or Ordinary Income? I thought I saw it should be reported on the W-2, which would tell me ordinary income and subject to FICA and Medicare....

Death&Taxes (talk|edits) said:

10 January 2007
Should be W-2 wages.

San Diego (talk|edits) said:

10 January 2007
Agreed, here is the citation I just found:

¶ 1224. Sale or cancellation of employment contract. Proceeds from an employee's sale of rights under an employment contract to be performed are ordinary income. The same is true of amounts received from an employer in cancellation of an employment contract. FTC ¶ H-1048 et seq.; Tax Desk ¶ 182,009

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