Rick Recently Received 500 Shares of Restricted Stock from His

question 114

Essay

Rick recently received 500 shares of restricted stock from his employer, Crazy Corporation, when the share price was $5 per share. Rick's restricted shares vested three years later, when the market price was $12. Rick held the shares for a little more than a year after vesting and sold them when the market price was $15. What is the amount of Rick's compensation income if Rick made an election under section 83(b)when the stock was granted? Assuming a marginal tax rate of 35 percent, what is the amount of Rick's ordinary income amount and tax liability at the time of the income inclusion?

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Definitions:

Banking Day

A business day during which financial institutions are open for conducting banking transactions.

Bank Statement

A bank statement is a summary of financial transactions that occurred over a certain period of time in a bank account, provided regularly by the bank to the account holder.

Transactions

The act of conducting business or commercial activities, often involving the exchange of goods, services, or funds.

Quarterly

Pertaining to or occurring every three months.