Stevie Recently Received 1,000 Shares of Restricted Stock from Her

question 101

Multiple Choice

Stevie recently received 1,000 shares of restricted stock from her employer, Nicks Corporation, when the share price was $8 per share. Stevie's restricted shares vested three years later when the market price was $11. Stevie held the shares for a little more than a year and sold them when the market price was $16. Assuming Stevie made a section 83(b) election, what is the amount of Stevie's ordinary income with respect to the restricted stock?

• A)$0
• B)$5,000
• C)$8,000
• D)$11,000

---

Definitions:

Accounting System

A structured process of collecting, recording, summarizing, and reporting financial transactions of a business or individual.

Accrual Basis of Accounting

An accounting method where income and expenses are recorded when they are earned or incurred, regardless of when the cash transactions occur.

Cash Basis

An accounting method where revenue is recorded when cash is received, and expenses are recorded when cash is paid out.

Adjusting Entries

Journal entries made at the end of an accounting period to update account balances for accruals and deferrals that are not recorded through regular transactions.