Facts: I have a client that wants to admit it's key employee as an equity owner of the company. The owner wants to give the employee company stock as a bonus. I believe that the bonus is part of wages and the employee's basis in the stock is the value of his bonus.

My question: what needs to be filed in order for the above to take effect? Does an 83(b) election need to be made? Or just simply document the payroll and bonus and include it in the W-2? My question is mainly procedural.