Company I worked for was bought out in 2011 and all stock options were paid out over time for managers. I left the company in 2012. A percentage of the payouts were retained in an escrow account for legal and tax purposes by the buyer. 5 years later (2016) the last of the escrow was paid and I was sent a 1099-MISC with block 7 (Non-employee Compensation) filled out. I entered the amount in Turbo Tax as "Other Income." I just received a letter from IRS that I did not pay self-employment taxes on this money and need to send that in. Is this a real Self-employment tax event or did I fill out the questions incorrectly after inputting my 1099-Misc data? Since I was not an employee at the time I received the money and the pay out was not related to what I do as a job, I thought that I was getting this payout without self-employment taxation.