Rick Recently Received 500 Shares of Restricted Stock from His

question 10

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 and sold them when the market price was $15.What is the amount of Rick's income on the vesting date? Assuming a marginal tax rate of 30 percent,what is Rick's tax on the restricted stock?

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Definitions:

Federal Law

Legislation passed by the United States Congress that applies to all states and U.S. territories.

Commercial Purpose

Activities undertaken with the intent of generating revenue or profit, often associated with business operations.

Probable Cause

A reasonable basis for believing that a crime may have been committed, essential for warrant issuance.

Double Jeopardy

A situation occurring when a person is tried twice for the same criminal offense; prohibited by the Fifth Amendment to the Constitution.