A person works as an employee for a software company. He eventually takes a different job closer to his home. Upon leaving the first job, the employer 'gifts' him a laptop computer plus the software necessary to access that company's network and do further programming, and asks him if he will occasionally do some programming for them. The company does not want the computer back. He is under no obligation to do further programming for them.
The person now works for the former employer as an Independent Contractor, doing occasional work for them in the evening and/or weekends when he is not at his new full time job. He never goes to the old employers workplace, attends meetings, etc. He is occasionally given small programming jobs to do and he charges a fixed hourly rate. The employer does not dictate times, hours, etc. He only uses the laptop computer for his Independent Contractor job.
How is the 'gifted' computer treated for tax purposes?
Will/should the old company include the value of the computer on a 1099?
Does the Independent Contractor have to pay SS and Medicare taxes on the value of the computer?