Rick Recently Received 500 Shares of Restricted Stock from His

question 47

Short Answer

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 30 percent, what is the amount of Rick's income inclusion and tax liability at the time of the income inclusion?

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Definitions:

Germ Layers

The primary layers of cells in an embryo (ectoderm, mesoderm, and endoderm) from which all tissues and organs develop.

Tubal Ligation

A surgical method of female sterilization involving the cutting, tying, or otherwise blocking of the fallopian tubes to prevent eggs from reaching the uterus.

Withdrawal Method

A form of birth control where the penis is withdrawn from the vagina before ejaculation to prevent sperm from entering the female reproductive tract.

Birth Control

Various methods or devices used to prevent pregnancy, ranging from hormonal pills to barrier methods and surgical procedures.