Pony,Inc ,Issues Restricted Stock to Employees in July 2016,with a Two-Year

question 21

Multiple Choice

Pony,Inc. ,issues restricted stock to employees in July 2016,with a two-year vesting period and an SRF.An employee must remain a full-time employee of Pony for two years after the restricted stock is issued.The stock is trading at $10 per share when Sam is issued 1,000 shares,and he does not make a § 83(b) election.At the end of 2016,the stock is selling for $13 per share.Sam remains a full-time employee of Pony for the required two-year vesting period,at which time the stock is worth $30 per share (in 2018) .Sam sells his 1,000 shares in 2020 at $36 per share.What amount and type of income will Sam recognize in 2020?

• A)$6,000 ordinary income.
• B)$6,000 capital gain.
• C)$26,000 capital gain.
• D)$6,000 capital gain;$20,000 ordinary income.
• E)$20,000 capital gain;$6,000 ordinary income.

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