[Individual]Note received for services (Feb-9-2011, 69 days left)

When your employer gives you a secured note:

You must include the fair market value of the note in your income.

When your employer gives you a nonnegotiable unsecured note:

The principal amount of the note are compensation income when you receive them.

When you receive the periodic payment or lump-sum payment following:

You don't include the recovery part of the fair market value as your income, and only include the remaining part, like interest.

PSQ

Source: http://www.irs.gov