Well, if you need my SSN in order to make a 1099, that makes sense, but I have to echo those above who are curious about how you would actually do that.  I assume that there is a form with a method to list noncash transactions.  This isn't automatically crazy just because it's Bitcoin, as some people in here seem to be assuming.  Remember that there are plenty of instances where people are paid in something other than cash, and that's all subject to the basically same rules as cash income.

However, I do think it is very important that you provide up front some detail on how you intend to establish fair market value. My intention has been (unless I find out this is wrong) to check the MtGox value at the time of each dividend and report that dollar value as income.  By recording the dollar value of the BTC I paid for a share at the time of share purchase, and the dollar value of the BTC I get back from a share at share sale, I can properly report my capital gain or loss.

It would be bad for everybody if mismatches started cropping up based on different ideas of BTC market value because of differences in averaging over time, or even looking at a different time on the same day, when the BTC price might have been volatile.  You don't want to have people disputing a 1099 in some kind of four-way cluster---- between a shareholder, you, your lawyer, and the IRS. This could very easily happen if your lawyers are not well-versed in complex securities issues.

We also, of course, need a lot more assurance than we have right now about the protection of our tax ID information.  This is a matter of routine for anyone asking for an SSN, as you know. But you also know as well as anybody that Bitcoin attracts very smart criminals and vandals who would just love the idea of dumping a gold mine of SSNs of shareholders from all over the community because they were held on an excel spreadsheet in the office of an issue-inexperienced lawyer who got in way over his head IT-security-wise.

The law firm you are working with is a generic criminal defense outfit that advertises no real competence whatsoever in matters of civil securities law. And the person we are actually sending this information to is not even mentioned on the firm's site, only coming up in Google searches as a company director of entities called Quentin Page LLC and X-Com LLC.

So I don't fundamentally have a problem with the basic idea of what you're doing.  But I think that there is space here to have legitimate concerns at this point about how it's being done and by whom.