Over the past 10 years I had been given shares from the privately held company I worked for as part of a long term incentive plan. When I left the company in 2008, I was given a 10 year note in return for my shares. This note makes semi-annual payments with interest at the prevailing prime rate for each 6 month period. I received my first payment (just a check, no supporting statement breaking out principal and interest) at the end of 2008.

Questions:

1) Do I have to recognize a capital gain/loss on the shares when I received this note?

2) Should I expect a 1099 from my company each year? (I received a W2 but not a 1099)

Thanks for your help.