Tobey Receives 1,000 Shares of YouDog! Stock as Part of His

question 11

Multiple Choice

Tobey receives 1,000 shares of YouDog! stock as part of his compensation package.Tobey's employment contract with YouDog!,Inc.,states that if he leaves before completion of three years of employment,he will forfeit the stock.The stock currently has a fair market value of $12 per share.Which of the following statements regarding Tobey's choices is not true?

• A)Tobey does not have to recognize any income from receiving the stock until his rights to the stock are fully vested.
• B)Tobey must report $12,000 as income due to the receipt of the stock in the current year.
• C)Tobey may elect to report the $12,000 FMV of the stock as ordinary income in the current year.
• D)If Tobey elects to report $12,000 as income in the current year and the stock price falls to $5 per share when his rights to the stock are vested,Tobey is not allowed to deduct a loss.

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Definitions:

Cultural Beliefs

Shared ideas that are accepted as true by a particular group of people, shaping their values, norms, and behaviors.

Practices

Commonly refers to habitual actions or behaviors that are a part of the daily lives of individuals or groups within a society.

Talcott Parsons

An influential American sociologist known for his theories on social action, systems theory, and the role of values in social order.

Goal-attainment Imperative

A concept in sociology and organizational theory indicating that organizations and societies mobilize resources and establish procedures to achieve specific goals.