Rick Recently Received 585 Shares of Restricted Stock from His

question 101

Essay

Rick recently received 585 shares of restricted stock from his employer, Crazy Corporation, when the share price was $22 per share. Rick's restricted shares vested three years later, when the market price was $29. Rick held the shares for a little more than a year after vesting and sold them when the market price was $32. 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:

Net Cash Flow

The disparity between what a business earns and spends in cash over a designated timeframe.

Dividend Payments

The portion of a company's earnings that is distributed to shareholders, usually in the form of cash or additional shares.

Cash Flow

The net amount of cash and cash-equivalents being transferred into and out of a business, reflecting the company's operational, investing, and financing activities.

Financing Activities

Transactions and business events that affect long-term liabilities and equity of a company, including issuance of shares, buyback of shares, and loans taken or given.