Tobey Receives 1,000 Shares of YouDog! Stock as Part of His

question 11

Multiple Choice

Tobey receives 1,000 shares of YouDog! stock as part of his compensation package.Tobey's employment contract with YouDog!,Inc.,states that if he leaves before completion of three years of employment,he will forfeit the stock.The stock currently has a fair market value of $12 per share.Which of the following statements regarding Tobey's choices is not true?

• A)Tobey does not have to recognize any income from receiving the stock until his rights to the stock are fully vested.
• B)Tobey must report $12,000 as income due to the receipt of the stock in the current year.
• C)Tobey may elect to report the $12,000 FMV of the stock as ordinary income in the current year.
• D)If Tobey elects to report $12,000 as income in the current year and the stock price falls to $5 per share when his rights to the stock are vested,Tobey is not allowed to deduct a loss.

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Definitions:

Psychotherapy

Psychotherapy is a therapeutic treatment primarily involving verbal communication used to help individuals overcome mental health problems or emotional difficulties.

Conceptual Knowledge

Understanding that is based on conceptualizing the relationships between ideas, principles, and abstract concepts, rather than relying solely on memorization of facts.

Staff Professional

A term that may not denote a specific concept but implies a professional member of an organization's staff, proficient and skilled in their field of expertise.

Shadowing

An approach to mentoring in which the trainee follows the mentor around for a stated period of time.